Time-of-Use Arbitrage Calculator — See How Much Your Battery Earns Buying Cheap Power and Selling It Back Dear

A time-of-use (TOU) arbitrage calculator shows how much money a home battery system earns per day and per year by charging at low off-peak electricity rates and discharging during high-price peak periods. Enter your utility’s peak and off-peak rates, your battery’s usable capacity, and its round-trip efficiency — the calculator returns daily profit per cycle, annual savings, the rate spread driving the arbitrage, energy lost to efficiency, effective discharge value, and a 10-year profit estimate.

How to Use the TOU Arbitrage Calculator

Step 1 — Enter your peak electricity rate.

Type your utility’s on-peak rate in dollars per kilowatt-hour. This is the price you pay for grid electricity during the highest-demand hours — typically 4 PM to 9 PM on weekdays in most US TOU rate plans. Find this on your utility bill’s rate schedule page or your utility’s online tariff viewer.

Peak rates vary dramatically by utility and state. California’s PG&E EV2-A rate reaches $0.55–$0.60/kWh during summer peak hours. Southern California Edison’s TOU-D-PRIME peaks at $0.45–$0.50/kWh. New York, Massachusetts, and Hawaii utilities also have high peak rates in the $0.35–$0.55/kWh range. The higher your peak rate, the more valuable each kilowatt-hour discharged from your battery during those hours — this is the revenue side of the arbitrage equation.

Step 2 — Enter your off-peak electricity rate.

Type the rate you pay during off-peak hours — typically overnight from 9 PM to 6 AM or midday from 10 AM to 2 PM depending on your utility’s rate design. This is the cost to charge your battery from the grid and represents the cost side of the arbitrage equation.

Off-peak rates in TOU plans are specifically designed to be low to encourage grid-friendly charging behavior. PG&E’s off-peak rate runs approximately $0.12–$0.18/kWh. SCE’s off-peak rate runs $0.12–$0.16/kWh. Most US utilities with TOU rate plans offer off-peak rates 60–75% below their peak rates, creating the price spread that makes battery arbitrage financially viable.

Step 3 — Enter your battery’s usable capacity.

Type your battery system’s usable energy capacity in kilowatt-hours. Use the manufacturer’s specified usable capacity — not the nameplate total capacity. The Tesla Powerwall 3 provides 13.5 kWh of usable capacity. The Enphase IQ Battery 10T provides 10.08 kWh. The Franklin Electric aPower 2 provides 13.6 kWh. Larger commercial batteries like the Tesla Powerwall 3 stacked systems or SunPower SunVault configurations can reach 26–40 kWh of usable capacity.

This is the maximum energy available for one full arbitrage cycle — charging completely during off-peak hours and discharging completely during peak hours. The calculator assumes one full cycle per day, which is the standard operating mode for TOU arbitrage-optimized battery systems with smart inverters from companies like Tesla, Enphase, and SolarEdge.

Step 4 — Enter your battery’s round-trip efficiency.

Type your battery system’s round-trip efficiency as a percentage. Round-trip efficiency is the fraction of energy you put into the battery that you get back out — accounting for heat loss during both charging and discharging cycles. Lithium iron phosphate (LiFePO4) batteries typically achieve 90–95% round-trip efficiency. The Tesla Powerwall 3 is rated at 90% round-trip efficiency. The Enphase IQ Battery series runs 89%. Older lead-acid batteries achieve only 70–80%.

The efficiency loss directly reduces your arbitrage profit — energy lost as heat during the charge-discharge cycle cannot be sold at peak rates. On a 13.5 kWh battery at 90% efficiency, 1.35 kWh is lost per cycle, reducing the effective dischargeable energy to 12.15 kWh.

Step 5 — Read the three result cards.

The Daily Profit card shows your earnings per complete arbitrage cycle — the value of energy discharged at peak rates minus the cost of charging at off-peak rates, after accounting for round-trip efficiency losses. The Annual Savings card multiplies daily profit by 365 to show the full-year financial benefit of running one cycle per day. The Price Spread card shows the raw delta between your peak and off-peak rates in dollars per kWh — the fundamental driver of arbitrage profitability.

Step 6 — Study the rate visualization.

Two vertical bars compare off-peak and peak rates to scale. The blue off-peak bar is always shorter — representing the cheap charging rate. The amber peak bar is taller — representing the expensive discharging rate. The visual height difference between the two bars immediately communicates the size of the arbitrage opportunity. A large height difference means strong arbitrage potential; bars of similar height mean the rate spread is too small for profitable arbitrage.

Step 7 — Review the data list.

Three additional figures appear below the chart. Energy Lost shows the kilowatt-hours consumed by efficiency losses per cycle — a concrete reminder that efficiency matters significantly. Effective Discharged Value shows the gross revenue from discharging at peak rates before subtracting charging cost. Ten-Year Estimated Profit projects your cumulative earnings over a decade at consistent daily cycling — a useful figure for battery payback analysis.

Step 8 — Export your analysis.

Click Export PDF to save a printable TOU arbitrage analysis — useful when evaluating battery system proposals from installers, comparing different battery products’ economics side by side, or presenting the financial case for a battery purchase to a spouse or financial advisor.

The TOU Arbitrage Formula Explained

The calculator uses a simple buy-low-sell-high energy trading model:

Cost to charge: Charge cost = Usable capacity (kWh) × Off-peak rate ($/kWh)

Value of discharge: Discharge value = (Usable capacity × Round-trip efficiency) × Peak rate ($/kWh)

Daily profit: Daily profit = Discharge value − Charge cost

Annual profit: Annual = Daily profit × 365

Price spread: Spread = Peak rate − Off-peak rate

Energy lost to efficiency: Loss = Usable capacity × (1 − Efficiency)

Example — 13.5 kWh battery, $0.45 peak, $0.12 off-peak, 90% efficiency:

• Charge cost = 13.5 × $0.12 = $1.62
• Discharge value = (13.5 × 0.90) × $0.45 = 12.15 × $0.45 = $5.47
• Daily profit = $5.47 − $1.62 = $3.85/day
• Annual profit = $3.85 × 365 = $1,405/year
• Price spread = $0.45 − $0.12 = $0.33/kWh
• Energy lost = 13.5 × 0.10 = 1.35 kWh per cycle
• 10-year profit = $14,050

Frequently Asked Questions

Q: What is time-of-use arbitrage and how does a home battery enable it?

A: Time-of-use arbitrage is the practice of buying electricity when it is cheap and using or selling it back when it is expensive — exploiting the price difference built into TOU utility rate plans.

Without a battery, you consume electricity at whatever rate applies at the moment you use it. With a battery and a TOU rate plan, you charge the battery during cheap off-peak hours — typically overnight or midday — then discharge it to power your home during expensive peak hours instead of drawing from the grid. Your utility meter shows reduced or zero consumption during peak hours, effectively replacing expensive peak electricity with the cheap off-peak electricity stored in your battery.

The financial benefit is the spread between peak and off-peak rates multiplied by your battery’s capacity and efficiency. The larger the spread, the more profitable each cycle. High-rate states like California, Hawaii, and Massachusetts with peak-to-off-peak spreads exceeding $0.30/kWh make TOU arbitrage substantially more valuable than lower-rate states where the spread may be only $0.10–$0.15/kWh.

Q: Which US states have the best TOU rates for battery arbitrage?

A: California consistently offers the most favorable TOU arbitrage economics in the US, followed by Hawaii, Massachusetts, New York, and Connecticut.

In California, PG&E’s EV2-A and E-ELEC rate plans and SCE’s TOU-D-PRIME rate create peak-to-off-peak spreads of $0.30–$0.45/kWh during summer months. A 13.5 kWh battery in California can realistically earn $1,200–$1,800 per year from TOU arbitrage alone — before counting the value of backup power protection.

Hawaii has high electricity costs across all hours but significant TOU differentials in newer Smart Rate programs. New England states — Massachusetts, Connecticut, Rhode Island — have strong TOU programs through National Grid, Eversource, and Unitil with spreads of $0.20–$0.35/kWh.

States with flat or minimal TOU rate differences — much of the South and Midwest — offer limited arbitrage opportunity, making battery economics there more dependent on backup power value than rate arbitrage.

Q: How does California’s NEM 3.0 change battery TOU arbitrage?

A: NEM 3.0 — California’s updated net metering policy effective April 2023 for new solar interconnections — dramatically increased the importance of battery TOU arbitrage for California solar homeowners.

Under NEM 2.0, excess solar exported to the grid was credited at near-retail rates regardless of time of day, making battery storage less financially critical. Under NEM 3.0, export credit rates were cut significantly — averaging $0.04–$0.08/kWh for most export hours — making it far more valuable to store solar energy and discharge it during peak hours than to export it.

A NEM 3.0 California solar-plus-battery homeowner gains double benefit from TOU arbitrage: they avoid paying $0.45–$0.55/kWh peak rates by discharging their battery during peak hours rather than drawing from the grid, and they avoid the low export rate by not exporting during non-peak hours.

The combination makes battery storage effectively mandatory for optimal solar economics under NEM 3.0 — which is precisely why California installer data shows battery attachment rates above 80% for new solar systems post-NEM 3.0 implementation.

Q: Does my battery need solar panels to do TOU arbitrage?

A: No. A battery connected to the grid can perform TOU arbitrage by charging from the grid during off-peak hours and discharging during peak hours — no solar panels required.

This grid-only arbitrage mode is fully functional but requires careful evaluation of whether the rate spread justifies the battery investment. A $10,000 battery system earning $800–$1,200 per year from grid-only TOU arbitrage has a payback period of 8–12 years — marginal economics without additional value from backup power or solar self-consumption.

Adding solar to the system improves TOU arbitrage economics substantially. Solar charges the battery for free during midday hours — eliminating the off-peak charging cost from the arbitrage equation entirely, since the energy cost is $0 rather than the off-peak rate.

When solar charges the battery and the battery discharges during peak hours, the daily profit equals the full peak rate per kilowatt-hour (minus zero charging cost and efficiency losses) rather than the spread between peak and off-peak. This dramatically improves the economics and is why the solar-plus-storage combination has become the dominant residential battery configuration in high-TOU-rate markets.

Q: How many cycles per day can a home battery realistically do for TOU arbitrage?

A: Most residential TOU rate structures support one full arbitrage cycle per day — one complete charge during off-peak hours and one complete discharge during peak hours.

Some utility TOU plans have two distinct high-price windows per day, theoretically enabling two partial cycles. However, most residential battery systems from Tesla, Enphase, and SolarEdge are programmed for a single daily cycle in TOU optimization mode because two full cycles per day would require a very precise timing window and would accelerate battery cycle degradation.

Battery warranties are typically expressed in total energy throughput (kilowatt-hours cycled over the warranty period) rather than calendar years alone. A Tesla Powerwall 3’s warranty covers approximately 4,000 kWh per kWh of capacity — roughly 4,000 ÷ 13.5 = 296 equivalent full cycles per kWh, or approximately 14,600 cumulative kWh of total throughput.

At one 13.5 kWh cycle per day, this represents approximately 1,082 days of full cycling before warranty throughput is exhausted — about 3 years. However, batteries rarely cycle at 100% depth of discharge in practice, and real-world cycle life significantly exceeds warranty minimums for most users doing 80–90% depth cycles rather than 100%.