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TOU Rate Structure

Solar ROI for Tucson Electric Power (TEP) Customers

Tucson Electric Power (TEP) charges an average of $12.8¢/kWh. Peak rates reach $23.5¢/kWh with off-peak at $6.5¢/kWh, creating strong battery arbitrage value. A 7 kW solar system produces a $14,044 NPV over 25 years.

$11,740
Net System Cost
$14,044
25-Year NPV
8 years
Payback Period
$0.101/kWh
Solar LCOE

Tucson Electric Power (TEP) Rate Structure

ParameterRate
Average residential rate$12.8¢/kWh
Peak rate$23.5¢/kWh
Off-peak rate$6.5¢/kWh
Peak/off-peak spread$17.0¢/kWh
Rate structureTOU
Export credit policyAvoided cost rate for excess generation

Solar System Economics

A 7 kW solar system for a Tucson Electric Power (TEP) customer costs $18,200 before incentives. The 30% federal ITC saves $5,460, and the Arizona state credit adds $1,000. The net out-of-pocket cost is $11,740.

At Tucson Electric Power (TEP)'s $12.8¢/kWh average rate, the system saves $1,568 in year one, producing 12,250 kWh. The solar LCOE of $0.101/kWh is 21% below Tucson Electric Power (TEP)'s current rate.

Battery Storage for Tucson Electric Power (TEP) Customers

$8,400
Battery Net Cost
$2
Daily Arbitrage
$565
Annual Arbitrage
-$3,029
25-Year Battery NPV

Tucson Electric Power (TEP)'s TOU spread generates $565/year in arbitrage value. The 25-year battery NPV of -$3,029 suggests batteries are marginal on economics alone. Backup power value and grid services programs may improve the case.

FAQ: Solar for Tucson Electric Power (TEP) Customers

How much can Tucson Electric Power (TEP) customers save with solar?
A typical 7 kW solar system saves Tucson Electric Power (TEP) customers approximately $1,568/year in electricity costs. Over 25 years, the NPV of savings after system costs is $14,044.
What is Tucson Electric Power (TEP)'s rate structure?
Tucson Electric Power (TEP) uses a time-of-use (TOU) rate structure with peak rates of $23.5¢/kWh and off-peak rates of $6.5¢/kWh. The $17.0¢/kWh peak/off-peak spread creates significant value for battery storage — TOU arbitrage alone is worth $565/year.
Does Tucson Electric Power (TEP) offer net metering?
Avoided cost rate for excess generation
Should Tucson Electric Power (TEP) customers add battery storage?
Battery storage for Tucson Electric Power (TEP) customers has a 25-year NPV of -$3,029. The economics are marginal based on TOU savings alone, but backup power value and future grid services programs may change the equation.

Other Utilities in Arizona

Arizona Public Service (APS)
$13.2¢/kWh · TOU
›
Salt River Project (SRP)
$12.8¢/kWh · TOU
›

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