Time-of-Use Tariffs and Solar: Why Does the Timing Matter More Than the Total?
Published by Quinn Lai | By InverPower Technical Team
Published 22 August 2026 · Last updated 22 August 2026
DIRECT ANSWER
On a time-of-use tariff, the same kilowatt-hour costs different amounts depending on when it is drawn, and demand is billed on the peak measured inside the peak window. That makes a solar design an exercise in timing: consume generation as it happens, keep the peak half-hour down, and treat export as the last resort rather than the plan.
A flat-rate customer has one lever, which is total consumption. A time-of-use customer has two, and the second one is worth more. Under the RP4 tariff structure that took effect on 1 July 2025 and runs to the end of 2027, medium and high voltage customers choose between a general schedule and a time-of-use schedule, and the choice changes what a solar system is being asked to do.
What does a time-of-use tariff actually charge for?
There are two separate charges moving. The energy charge is priced per kilowatt-hour and differs between the peak and off-peak windows, so identical consumption costs more inside the window. The demand charge is priced per kilowatt of maximum demand, and TNB defines that as twice the largest number of kilowatt-hours supplied in any consecutive thirty minutes in the month — a half-hour average, not an instantaneous spike.
On a time-of-use schedule that demand charge is assessed on the peak window only. Off-peak demand is not billed, which is why a factory that can move a heavy start-up out of the window changes its bill without changing its output. RP4 also split the old single demand charge into separate capacity and network components, and for medium voltage customers the combined per-kilowatt figure rose steeply against the previous period — roughly tripling on the general schedule. Whatever the site does about energy, demand is now the line worth designing around.
The peak window is commonly quoted as weekday afternoons into the evening, but it is set by the customer's own tariff schedule and it is worth reading rather than assuming. Design decisions that hang on the window should be checked against the actual schedule on the bill.
Where does solar land against that window?
A rooftop array in Malaysia produces from mid-morning, peaks around midday and falls away through the late afternoon. That covers the first part of a typical peak window well and the last part of it not at all. So the same array does two different jobs in one day: while it is generating it suppresses both the energy drawn at peak rates and the demand recorded in those half-hours, and once it drops off the site is back on the grid at the most expensive time of day.
This is why self-consumption is the metric that matters, not generation. A kilowatt-hour consumed on site displaces a kilowatt-hour that would have been bought at the peak rate. Under Solar ATAP, which replaced NEM from 1 January 2026, non-domestic export is credited at the system marginal price rather than at the retail rate — so the exported unit is worth less than the one you keep. Size and orient for consumption first; export is what happens to the surplus, not the business case.
Flat rate against time-of-use, as a design brief
| General schedule | Time-of-use schedule | |
|---|---|---|
| Energy charge | One rate around the clock | Peak and off-peak rates |
| Demand charge | Highest half-hour in the month | Highest half-hour inside the peak window |
| What solar is worth | Every kilowatt-hour displaced equally | Displaced peak kilowatt-hours are worth more |
| Value of load shifting | Only where it lowers the monthly peak | Lowers both the peak and the energy rate paid |
| What a battery is paid to do | Shave the monthly peak | Shave the peak and carry the evening at peak rates |
| Export | Surplus at the programme's export rate | Surplus at the programme's export rate |
What is a battery actually being paid to do?
On a time-of-use site, storage earns in two ways that have nothing to do with backup. It carries the part of the peak window that sits after the array has stopped generating, using energy stored at midday for nothing. And it holds down the half-hour average that sets the demand charge, which is the single largest controllable line on a medium voltage bill under RP4.
Both of those are sizing constraints rather than slogans. Carrying the evening needs capacity — kilowatt-hours enough to cover the gap between sundown and the end of the window. Shaving demand needs power — kilowatts enough to cover the difference between the site's normal draw and its peak. A battery sized for one will not necessarily do the other, which is why the load profile comes before the product selection.
The shifting a customer can do before buying anything
Some of this needs no hardware at all, and an EPCC who points it out early tends to be trusted with the rest of the job. Heavy intermittent loads — pumping, compressed air, batch processing, charging fleets — can often run in solar hours instead of at night or in the evening. Simultaneous start-ups after a break can be staggered, because the charge is a half-hour average and everything switching on at once lands in one half-hour.
Air conditioning is usually the exception: it peaks with the building's own occupancy, and it does not move. That is the load storage was made for, and it is the reason a system that looked marginal on energy arithmetic alone can make sense once the demand charge is counted.
Specifying it
The equipment decisions follow the profile: inverter power for the peak the array has to cover, battery capacity for the hours after generation, and monitoring that reports at half-hour resolution so the customer can see the demand charge behaving. InverPower stocks Sungrow string and hybrid inverters, storage, and the balance of system to go with them, held in Malaysia. Send the interval data and the bill of materials and we will tell you what pairs and what is on the shelf.
Frequently Asked Questions
Does every commercial customer in Malaysia have a time-of-use tariff?
No. Medium and high voltage customers choose between a general and a time-of-use schedule, and low voltage commercial customers are on their own structure. The customer's tariff class and peak window are printed on the bill, and both should be confirmed before any design decision rests on them.
Is a battery worth it for tariff arbitrage alone?
It depends on the shape of the load, not on the tariff in the abstract. The case is strongest where a significant load continues after the array has stopped generating, and where the monthly peak half-hour is well above the site's normal draw. Both are visible in interval data and neither is visible in a monthly bill.
Does solar reduce the maximum demand charge?
Only in the half-hours when it is generating. If the site's peak half-hour falls in the evening, an array without storage does very little for the demand charge, however large it is. This is one of the most common gaps between what a customer expects from solar and what the bill shows.
Should a system be sized for export or for self-consumption?
Self-consumption. Under Solar ATAP, non-domestic export is credited at the system marginal price rather than the retail rate, so a unit kept on site is worth more than a unit sent out. Export is the sensible destination for surplus, not the reason to build the array.
Sources
- Suruhanjaya Tenaga — RP4 tariff schedule, effective 1 July 2025 to 31 December 2027 (tariff classes, capacity and network charge structure) — https://www.st.gov.my
- TNB — Maximum Demand definition and measurement, and guidance on reducing it — https://www.tnb.com.my/commercial-industrial/maximum-demand
- TNB — current tariff schedules and bill components — https://www.mytnb.com.my/tariff
- SEDA Malaysia — Solar ATAP programme, implemented 1 January 2026, export offset arrangements — https://www.seda.gov.my/reportal/atap/
About InverPower
InverPower is Malaysia's A–Z solar component distributor — Sungrow Preferred Distributor and Sunkean Sole Distributor — supplying EPCCs, installers, and government projects nationwide.
Explore the InverPower resource hub at inverpower.com.my
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