Trading the wholesale/spot energy price

The landscape of energy pricing is constantly evolving, offering homeowners more options than ever before. Traditionally, energy providers presented fixed rates (peak, off-peak, and shoulder), and fixed feed-in tariffs. This allowed homeowners to adjust their energy consumption and time the use of their appliances for maximum efficiency. However, a new breed of energy retailer, epitomised by companies like Amber Electric, is now offering access to direct wholesale rates in exchange for a fixed monthly fee. This article explores the pros and cons of such an approach, and how homeowners with solar and battery installations might benefit.

Understanding Amber Electric’s Model

Amber Electric is revolutionising how we think about energy pricing. Instead of charging you a marked-up price for electricity, Amber sells electricity at the exact wholesale price they purchase it for. What this means is that every five minutes, as the wholesale electricity market price shifts based on demand, you get real-time price information. Their smart app notifies you about these price changes, enabling you to make informed decisions about your energy consumption.

For solar homeowners, there’s another unique aspect: Amber doesn’t offer a fixed feed-in tariff. The real-time feed-in tariff (FiT) you get mirrors the 30-minute wholesale price of energy. With a battery storage system, homeowners can strategically supply power to the grid when demand peaks, potentially earning credits on their electricity bills.

Pros of Trading the Wholesale Energy Price:

1. Real-Time Pricing: With Amber’s app, you have real-time information on electricity prices, allowing you to make on-the-spot decisions about power consumption.
2. Flexibility: With no fixed feed-in tariff, there’s potential for earning more during peak demand periods.
3. Empowerment: The app notifies users when wholesale prices exceed a predetermined limit, helping to avoid unexpected costs.
4. Battery Integration: Those with battery installations can further optimise their energy use and returns with Amber’s SmartShift™ technology, which either lets users manually control charging and discharging or automate it.

Cons of Trading the Wholesale Energy Price:

1. Price Fluctuations: Without a fixed rate, there can be periods where electricity costs are higher than average.
2. Requires Active Management: To maximise benefits, homeowners may need to be more proactive in monitoring and adjusting their energy usage.
3. Variable Returns: The changing FiT means returns from supplying power to the grid can be inconsistent.
4. New Model: As a relatively fresh approach, there may be a learning curve for some homeowners in understanding and adapting to real-time pricing.

The Less Hands On Option: Virtual Power Plants (VPP)

If you like the idea of taking advantage of wholesale energy price fluctuations but don’t have the time or patience to monitor the prices and attempt to do it yourself – there is another way, Virtual Power Plants (VPP).

Essentially you join, through an energy retailer, a collection of other homeowners with solar and batteries who all want to make a higher return from their systems. The energy retailer then unites all of the individual solar and battery installations, to trade the wholesale power prices as a collective, automatically – which not only ensures grid stability during high demand but also delivers enhanced financial returns for homeowners.

Find out more about VPPs here.

The Takeaway for Homeowners with Solar and Batteries:

For homeowners equipped with solar panels and battery storage, engaging with a real-time pricing model can be advantageous. It provides an opportunity to maximise returns from your solar system, especially during peak demand periods. By adjusting energy consumption patterns and strategically using stored energy, homeowners stand to benefit both environmentally and financially.

Always remember, the evolving energy market offers numerous opportunities, and it’s up to the informed homeowner to harness them effectively. As you journey through this energy landscape, stay updated, stay informed, and make choices that best suit your home and lifestyle.