As energy prices soar in California, solar lowers electricity bills

Nearly 40 million people call California home, and statewide energy use is projected to increase for the next two decades. While Californians may be most familiar with water conservation efforts and drought response programs, the state has also implemented several evolving strategies to help reduce electricity consumption and balance local energy supply and demand.

In this article, we outline how energy conservation efforts affect homeowners in California to showcase how solar energy systems can reduce your ongoing expenses and increase your power resilience with sustainable access to electricity at home.

The effects of rising energy demand in California

While statewide energy demand grows annually, increased consumption during peak usage hours causes electricity rates to rise each day, which can comprise sustainable access to power with high levels of stress on the local energy grid. Throughout the year, California’s energy demand is highest in the summer, with peak periods in the late afternoon and early evening.

In response to increased energy demand, both annually and throughout each day, Californians may be affected in the following three ways.

• Increased energy prices

  In 2006, the average price of home electricity in California was about 14.14 cents/kWh. In 2024, it is 34.26 cents/kWh, which is more than twice the national average rate and represents a 142.27% price increase over 18 years.

• Time-of-use (TOU) rate plans

  Today, most California electric utilities have adopted time-of-use rate plans, which assign the price of electricity based on local energy demand. With TOU plans, utility customers are encouraged to favor grid electricity consumption during “off-peak” hours when rates are lower to help balance local energy supplies. 

• Rotating power outages

  As a last resort, several utilities in California have implemented rotating power outages to help prevent widespread blackouts when the energy grid is under extreme stress. Usually only lasting one or two hours, Californians can power through rotating outages with home battery storage or a backup generator.

Conserving energy, saving money during peak demand hours

With efficient appliances and smart usage habits, you can reduce your home’s electricity consumption, monthly expenses, and impact on local energy demand spikes in California. To maximize energy savings while using grid-supplied electricity, consider running high-consumption appliances, like air conditioners, laundry, and dishwashers, outside of peak demand hours.

To save money and conserve energy, you can also:

• Use a smart thermostat to set comfortable room temperatures before peak demand periods
• Explore alternative home cooling methods like fans, drapes, or window coverings
• Make building envelope improvements such as energy-efficient doors, windows, sealing, or insulation to better maintain interior temperatures
• Install home energy storage and sell electricity to the utility at high rates for exported power

Demand response programs for energy conservation

To encourage energy conservation, several utilities in California have implemented demand-response (DR) programs in which customers receive bill credits for intentionally lowering electricity consumption during peak demand hours. For example, those who enroll in PG&E’s Power Saver Rewards can earn bill credits by reducing electricity use between 4 p.m. to 9 p.m. on select days between May 1 and October 31.

While enrolled, DR participants receive notifications with the details of optional, forthcoming events. Bill credits are typically tallied at the end of each season, with compensation for all events in which property energy consumption successfully stays below a set parameter.

Maximizing energy conservation and savings with solar

Californians with solar energy and storage systems can maximize their electricity savings within demand response and time-of-use-billing programs, while also providing a sustainable source of power throughout local outages. With increased energy independence, savings, and resilience, a solar energy installation can help reduce your long-term spending on grid electricity with self-consumption of solar power and strategic grid exports within net metering or net billing tariff (NBT) agreements.

Active demand-response participation

Homeowners with solar and battery systems can reduce grid electricity consumption within demand-response programs by using solar power and stored energy during peak demand events. Paired with high-performance technology, the Enphase App makes it easy to see and control your property’s electricity production and consumption, including optional automation for optimal energy savings.

Virtual power plants and grid-sharing programs

Californians with solar and battery systems can also be compensated for exporting stored energy to the grid during peak-demand hours within virtual power plant (VPP) programs. By tapping into customer-owned resources, rather than building additional energy production facilities, experts believe accelerated VPP adoption could help save Californian ratepayers $550M annually by 2035.

Getting started with home solar in California

There are hundreds of certified installers in California available to help optimize your solar energy system. While talking to local professionals, it is important to evaluate which energy conservation efforts may impact your system’s value and performance. To design your solar energy system and see what programs or incentives are available in your area, Enphase is here to help.