Time-of-Use Pricing

Definition: An electricity billing method where rates vary based on the time of day, season, and day type (weekday/weekend/holiday).

Relevance to energy: Time-of-Use pricing encourages consumers to shift energy use to off-peak hours, helping to balance grid load and potentially reduce overall energy consumption.

Benefits:

  • Can lead to lower electricity bills for consumers who shift usage
  • Helps reduce strain on the power grid during peak hours
  • Encourages the use of energy-efficient appliances and practices

Drawbacks:

  • May be confusing for some consumers to understand and manage
  • Can potentially increase bills for those unable to shift usage
  • Requires smart meters or advanced metering infrastructure

Statistics: A study by the American Council for an Energy-Efficient Economy found that Time-of-Use rates can reduce peak demand by 6-11% on average.

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