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Planet-Profit Report, reporting on sustainable development in the Western United States.

How electricity pricing boosts solar

An examination of San Francisco

By John Farrell, energyselfreliantstates.org

What if electricity cost more when the sun was shining?

Many utilities are using new electronic "smart meters" to adjust the price of electricity as often as every 15 minutes, to reflect supply and demand.  And charging more when electricity is in short supply can be good news, making investments in distributed solar power pay off faster.

Time-of-use (TOU) pricing is a different billing method for electricity, where the customer pays based on the time of day of using electricity rather than a flat rate per kilowatt-hour consumed.  The premise is that electricity is more expensive when in high demand (e.g. by air conditioners in the afternoon on hot, sunny days) and that pricing accordingly will help reduce demand.

For example, customers in San Francisco on a TOU pricing plan pay more for electricity during peak hours (12 PM to 6 PM).  In the cold months (November through April), the peak rate is 11.1 cents per kilowatt-hour (kWh), compared to 8.3 cents during non-peak hours.  But in the warm months (May through October), electricity used from 12 PM to 6 PM costs 31 cents per kilowatt-hour (kWh), while  off-peak electricity is 7.9 cents per kWh.

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