Tier shaving is a great way to get the most from your money when making a solar purchase or lease. In fact, it has really become a very smart fiscal strategy. What is tier shaving you ask?
Before we can break down how tier shaving saves you money, you need to understand how your electric bill works. By law, SDG&E (or any utility) charges you a higher rate as you consumption increases. These rates are broken down into four tiers. For example, in San Diego, California, at tier one, which is your baseline, you are charged 14 cents per kilowatt in the summer (rates can vary depending on your location and the season). The second tier is a little higher, at 16 cents. Tier three skyrockets up to 29 cents per kilowatt, and the tier four rate is double that of the baseline, at 31 cents a kilowatt. If your electric usage has you in the top two tiers, you’re going to be paying a lot for your electricity and it doesn’t take much to push you bill into those tiers.
If you have a swimming pool and are running the pump 4 to 5 hours a day (which is less than average), that’s going to eat up your entire baseline, forcing you into tiers three and four for all of your other electric needs- from the coffee pot to the computer.
Tier shaving is a strategy that allows you to cut back on your overall electricity consumption, allowing you to pay at a tier one and two rate. By installing a smaller solar system engineered to shave off the higher, more expensive tiers, you get the fastest return on your investment; maximize your savings while paying less upfront. For example, if your solar system produced enough energy to offset the use of your pool pump during the day, the rest of your energy needs will be charged at those lower rates. It’s not hard to see how quick the savings can add up.
Many homeowners, especially those who are excited about living a green lifestyle, want to shave off 100% of their bill through the use of solar power. The problem is that can be really expensive. A better option is to use a tier shaving strategy and buy a smaller system that shaves off approximately 70% of their bill. They would continue to buy a small amount of electricity, but at the lower tiers and in the long term potentially save more money and still help preserve the environment. That is the sweet spot.
Solar has really become a way to refinance your electric bill. With new solar lease products on the market that offer zero-out-out-pocket to get started, homeowner can start saving an average of 10-30 percent on their electric bill from day one. With solar companies making it easy to save money, it makes sense for homeowners to explore all of their energy options.
