Time-of-Use Tariff

How a Time‑of‑Use Tariff Works

• Variable rates: Utilities set different prices for electricity during peak, mid‑peak, and off‑peak hours. The rates are usually higher when the grid is most stressed (e.g., evenings) and lower when demand is light (e.g., early mornings).
• Scheduled periods: The utility publishes a schedule, such as:
  • Off‑peak: 00:00‑06:00, 22:00‑24:00 – 0.10 ILS/kWh
  • Mid‑peak: 06:00‑12:00, 18:00‑22:00 – 0.18 ILS/kWh
  • Peak: 12:00‑18:00 – 0.30 ILS/kWh (Numbers are illustrative; actual rates differ by provider.)
• Metering: Smart meters record when electricity is used, automatically applying the correct rate.

Why It Matters

• Cost control: Consumers can lower bills by shifting flexible loads (dishwashers, EV charging, water heating) to cheaper periods.
• Grid stability: By encouraging demand to move away from peak times, TOU tariffs help reduce the need for expensive peaking power plants and lower the risk of blackouts.
• Environmental benefit: Smoothing demand allows more renewable generation—especially solar—to be used without curtailment.

Concrete Example

Imagine a household that consumes 500 kWh per month, with 200 kWh during off‑peak, 150 kWh mid‑peak, and 150 kWh peak. Using the illustrative rates above, the monthly electricity cost would be:

• Off‑peak: 200 kWh × 0.10 = 20 ILS
• Mid‑peak: 150 kWh × 0.18 = 27 ILS
• Peak: 150 kWh × 0.30 = 45 ILS Total = 92 ILS. If the same consumption were billed at a flat rate of 0.20 ILS/kWh, the bill would be 100 ILS, showing a 8 % saving simply by shifting usage.

Relevance to Solar Energy in Israel

• Net‑metering alignment: Israel’s electricity market introduced TOU tariffs for residential and commercial customers in 2022. Solar owners with net‑metering contracts receive the same time‑varying rates for the electricity they export to the grid, making self‑consumption during peak periods especially valuable.
• Battery economics: A home battery can store solar generation produced at noon (when the sun is strongest) and discharge it during the evening peak, effectively earning the higher TOU price and improving the return on investment.
• Policy incentives: The Israeli Ministry of Energy encourages TOU‑aware solar designs, offering technical guidelines and, in some cases, modest subsidies for smart‑meter installations.

By understanding and responding to TOU tariffs, Israeli solar customers can maximize savings, support grid reliability, and make the most of the country’s abundant sunshine.