In many States such as California, utilities often will charge customers different rate tiers for kilowatt hour usage. The more power you use, the higher your rate jumps for that above average usage. As a result, using solar with tiered rates can save a lot of money.
- For example, the lowest rate in PG&E territory is about 11 cents per kilowatt hour (kWh) for the “base tier.” Everybody gets this rate for a certain amount of usage.
- When you use more than this certain amount, the utility charges you HIGHER rates. The next rate tier above 11 cents is 25 cents/kWh–more than double. If you use even more, the rate jumps even higher to 35 cents/kWh. The utilities do this to penalize energy hogs and to encourage conservation. One way to do that: Go solar.
- If you buy enough solar panels to offset your usage by say just 50%, you’re sort of tricking the utility into thinking you use a lot less energy. In reality, your solar panels are generating enough to get you out of the higher tiers back into the lowest tier.