What is a Time-of-Day (TOD) Tariff?


What is a Time-of-Day (TOD) Tariff?
Have you ever wondered why your electricity bill sometimes feels higher, even when your usage seems consistent? One reason could be the Time-of-Day or TOD tariff – a smarter way to price electricity that reflects when you use it, not just how much you use.
So, what exactly is a Time-of-Day tariff?
A TOD tariff is an electricity pricing system where the rate you pay varies based on the time of day. The day is divided into peak hours, off-peak hours, and normal hours – each with different pricing.
Let’s break it down:
Peak Hours are when electricity demand is at its highest – usually in the mornings and evenings when people are getting ready for work or returning home. During this time, electricity is more expensive.
Off-Peak Hours are the opposite – when demand is lower, such as late at night, early morning, or weekends. Electricity is cheaper during these hours.
Normal Hours are neither peak nor off-peak and are charged at a standard rate.
Now, how does it work?
The idea is simple – incentivize smart usage. TOD tariffs encourage consumers to shift heavy electricity use, like running washing machines, water heaters, or charging electric vehicles, to off-peak hours. This helps balance the grid by reducing demand during peak times and easing the pressure on electricity infrastructure.
In fact, countries like India have already adopted TOD tariffs. For example, electricity rates may drop by 10–20% during solar hours, when solar energy is abundant. On the flip side, prices may rise by 10–20% during evening peak hours to reflect the increased demand.
So, what are the benefits?
Lower Energy Bills – By shifting your usage to cheaper time slots, you can save real money. Better Grid Management – TOD tariffs help flatten the load curve, reducing the need for expensive peak-time power generation. Greener Energy Usage – Encouraging off-peak consumption during solar hours promotes the use of renewable energy, supporting a cleaner environment.
Summary
In short, Time-of-Day tariffs empower consumers to make smarter energy choices—saving money, stabilizing the grid, and supporting sustainability. So, next time you flip that switch, think about when you're using power, not just how much!

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