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How TOU Rates May Increase Costs for Electric Fleet Operators


Elisa Bustos

January 18, 2022

Time-of-use (TOU) is a rate plan in which the rates vary according to the time of day, season, and whether it is a weekday or weekend/holiday. Higher rates are charged during peak demand hours and lower rates during off-peak (low) demand hours.
This rate structure provides price signals prompting energy users to shift energy use from peak hours to off-peak hours.

The chart below shows an example of pricing for a time-of-use rate plan. Red indicates high price periods, and yellow indicates low price periods.

If you want to learn more about energy management and smart charging, download our new report, "Energy Management 101: How to Efficiently Charge Electric Fleets".

TOU rates examples summer vs winter

If properly designed and implemented, TOU rates may allow individual consumers to reduce their energy bills and improve system utilization. It also helps the electric grid, as it can reduce the peak energy demand on the grid.

If enough individual consumers respond to the price signals that TOU rates provide, it can also generate supply and delivery cost savings for all. States such as California, are now making TOU rates the default program for consumers. TOU rates are becoming the new normal for our electricity bills.

TOU rates also offer rewards for specific customers, such as giving EV owners better rates. For example, Coned reduces their customer’s monthly base charges by around 21%.
However, the reality is that energy users don’t usually pay attention to peak and off-peak hours, which can lead to big unexpected bills. Without technology to help them manage their consumption, it is difficult to see the benefits of TOU rates.
Fortunately, optimization technologies such as smart home monitors and devices, and EV charging optimization software, have had a great impact on the industry and help customers to manage their electricity bills more effectively.

What do TOU rates mean for EVs?

The number of EVs on the road is rapidly increasing. President Biden recently set the ambitious target of 50% of electric vehicle (EV) sale shares in the U.S. by 2030, which shows how the market will grow, not only residentially, but also in public and commercial spaces.

This growth in EVs means thousands of new electric vehicles and chargers connected to the same electric grid. Utility companies face challenges that could lead to different problems, such as power outages and increasingly expensive energy costs.
TOU rates can provide a more controllable way of managing the flow of energy in the grid. Setting times of the day for off-peak and peak power usage allows EV owners and operators to schedule charging sessions accordingly, shifting the energy load and not overloading the grid.

Utilities and energy users can leverage TOU rates together in order to:

  • Reduce the number of costly grid upgrades when the number of EVs is increasing
  • Avoid the need for new power plants that may arise due to possible higher energy consumption during peak periods
  • Avoid possible fuel-based power plants for backup power during peak demand periods.

The Impact of TOU rates on Electric Fleets

For electric fleet operators, TOU rates mean a significant advantage in cost savings if done correctly. Fleets are the perfect candidate for electrification since there is a set schedule, unique charging stations, and specific operations for each vehicle. 

Even with the most basic information — vehicle schedules — the fleet operator is able to save costs by adapting the charging sessions to the off-peak hours of the day. This sounds simple, but with increasingly complex operations, this task can become very difficult. 

The diagram below shows how fleet operators can optimize for TOU rates:

TOU rates smart charging optimization Ampcontrol

The diagram shows an example scenario of one vehicle arriving at the fleet depot:

  1. The vehicle arrives during the peak pricing hour. The driver plugs in the vehicle and ends their shift.
  2. Instead of charging the vehicle immediately during the expensive time period, a smart charging option automatically shifts the charging towards the cheaper off-peak period.
  3. The algorithms ensure that the vehicle is fully charged for the next trip.

This process can be fully automated and optimized by using intelligent smart charging systems, without any additional complex steps for the driver or fleet operator. For example, Revel optimizes the largest EV fleet in New York and saves up to 45% of their monthly costs.

Now, how can a fleet operator ensure cost savings, while also ensuring on-time departures, battery life optimization, temperature change control, and V2G events?

The truth is, TOU rates are only one small part of a much bigger problem. At Ampcontrol, we focus on delivering top-quality optimization. Our team of engineers and data scientists is 100% focused on creating algorithms that tackle multi-objective optimization. Our AI-powered software optimizes the charging of electric fleets using real-time data from existing systems. All of this can be done through seamless API integrations and no additional hardware.

If you want to learn more about fleet optimization read the following article:

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