Understanding time of use arbitrage battery sizing
How TOU arbitrage actually works
The battery charges during cheap off-peak hours, typically overnight, then discharges to cover household load during the expensive peak-rate window instead of drawing from the grid at the higher rate, a strategy the Department of Energy's inverter basics guide covers as part of how grid-tied battery systems interact with utility rate structures. Sizing this battery correctly means covering the full peak-rate window with stored energy, so the household avoids grid draw entirely during the most expensive hours. A home using 2 kW during a 4 hour peak window needs about 9.7 kWh of nameplate capacity to fully cover that window.
Why this strategy depends entirely on your rate plan
Time of use arbitrage only generates savings when there's a meaningful price difference between peak and off-peak electricity rates on your specific plan. A flat-rate plan with the same price all day offers no arbitrage opportunity at all, since there's no cost gap to exploit. Utilities with steep time-of-use price differentials, common in states with high renewable penetration and evening demand peaks, offer the strongest financial case for this strategy, a rate-structure distinction tracked by the DSIRE database of state energy policies.
How this differs from peak shaving
Time of use arbitrage targets the price difference between rate periods regardless of your actual peak demand level, while peak shaving specifically targets reducing your single highest demand spike to lower demand charges. These are related but distinct financial strategies, and some battery systems can pursue both simultaneously with sophisticated control software, a capability the hybrid inverter sizing calculator in our Inverters & Equipment category can help confirm your inverter supports. The peak shaving calculator covers that related but separate approach.
What to do with this number next
Once you have a TOU arbitrage battery size, the charge time from grid tool confirms the battery can fully recharge during your off-peak window, and the cost per kWh comparison tool helps weigh the upfront investment against your expected savings. If EV charging is scheduled around the same off-peak window, the off-peak EV charging with solar battery tool in our Solar + EV Integration category covers that combined strategy.