Solar power is one of the most common forms of renewable energy that we find in homes today. Due to the affordable technology and the government’s push, there has been a big jump in the number of homes that are installing solar energy systems in their homes. Currently, solar power accounts for around 3% of all energy produced in the US, and it is predicted to go up in the coming years.
Solar panels and energy storage equipment being more affordable than ever has played a big role in this increase in popularity. For a residential setup, the average cost of installation of a solar system has fallen by over 60% during the period from 2010 to 2020. This along with other federal and state schemes for tax credits and other incentives has resulted in increased traction for solar energy.
There are of course other benefits to consider here. Increased energy costs have been hampering daily life with low-income households having to reduce their consumption. With incomes already hampered by the pandemic, it is natural that power costs will be a worry for most households. Solar power is affordable and it can take your household virtually off-grid. It is also clean energy and hence sustainable. If we are to talk about the benefits of solar energy, there’s enough to fill pages. But this blog has a different purpose.
As more homeowners like you consider solar installations in your homes, there is a real opportunity for some revenue too. Solar arbitrage is what this opportunity is called. With a home battery storage system and some smart planning, you can not just reduce your electric bills. You can get some money back too. Here’s how solar arbitrage can help you.
What’s Solar Arbitrage?
In simple terms, it’s taking advantage of the difference between peak and off-peak rates in electricity and also selling the energy you produce and store via solar into the grid. This may sound pretty complex but let us explain.
The peak tariffs for electricity usually kick in between 4 pm and 9 pm when there is a huge electricity demand. the time from 9 pm to 8 am and 8 am to 4 pm are usually off-peak hours. If you have solar, the difference is that you can get your solar batteries charged between the 8 am to 4 pm slot and use this at a later time.
If you are in California, the Net Metering (NEM 2.0) plan allows you to get credit for the electricity that you are feeding back into the grid at the same retail rates as you are purchasing it. This means that if you can store solar energy in your energy storage system during the day and send it into the grid during peak hours, you can earn peak hour tariffs. You can then use the grid power at off-peak rates to recharge the home energy storage and also for other usages.
For further clarity, here’s how it can work.
The Summer peak electricity rates for weekdays fall between 4 pm and 9 pm and cost about 53 cents per Kilowatt-hours (KWh) (Rates for SCE). The off-peak rates are at 33 cents. If you have a solar battery storage system, the batteries can be fully charged during the day using solar and this energy can be sold back into the system at 53 cents during peak hours. Post the peak hours, you can use the nighttime rates to either charge the batteries again or to use this for your home needs such as running appliances that consume a lot of electricity.
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