NEM 2 was recently enacted in California and it introduces, among other changes, a time-of-use (TOU) rate structure. TOU rates are an emerging trend replacing the more traditional tiered rate structure currently used by many utilities for solar panels.
In tiered rate structures, the utility will charge increasing rates as your usage exceeds your baseline usage. For example PG&E baseline charges are 19.979 cents per kW increasing to 27.612 cents per kW for the next tier (up to 400% over baseline) and 40.139 cents for the highest tier.
In TOU structures, rates can be divided into off-peak, partial-peak and peak based on the time of day in which the electricity is supplied.
What does this mean to the position on my solar array?
Historically we were all told that south facing solar panels produce the most power as they were exposed to the most daily sunlight. Studies show that south facing systems produce about 10 to 15 percent more power than west facing systems. Since utility tiered rate schedules did not differentiate when a kilowatt was produced, this orientation was optimal for the homeowner.
Along comes TOU rates which now may change the orientation landscape. The why is simply that TOU rates are the highest in the late afternoon and early evening making a kilowatt produced during that time period more valuable than one produced at 11AM. A new study from the Pecan Street Research Institute shows that west facing systems produced up to a whopping 49% more electricity during the 3PM-7PM time period than their south facing cousins. This study was conducted in Texas, so results by area may differ significantly.
Is West now the best for solar panels?
What this means is that solar panels placed on west facing roofs may have just became more affordable as it will no longer be the total kilowatts produced determining the size of the system but when the kilowatts are produced. For example, PG&E has Tier 1 peak rates ranging from 35.9 cents per kilowatt and off peak rates of 16.7 cents per kilowatt.
What this means is that power produced during the peak hours is more than twice as valuable as that produced in off-peak hours which should now be taken into account as you consider the positon of the solar panels on your roof as well as to overall number of panels required to meet your needs.
Overall system sizing is based on a number of factors including the azimuth (north-south/east-west), roof pitch, shading factors along with current and planned usage data.