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rjwilmsi | 1 year ago

You are mixing the grid and retail electricity prices.

The retail electricity prices are linked to the wholesale gas cost. So consumers pay the same unit rate for electricity regardless of source/time of day etc. (simplification). Average 23p / kWh or so.

However, the producers of the electricity get paid the grid spot price. Plus any source-specific government-agreed subsidies (for nuclear, or the strike price for wind auctions).

So the typical/average UK grid electricity spot price is around £70 per MWh or 7p per kWh, so while retail is 23p / kWh a solar producer doesn't get paid 23p.

What you will also find is that the spot price, while it varies a lot, tends to be higher in the UK late afternoon / early evening, and higher in the winter than the summer, both of which are normally times when solar output is lower.

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tialaramex|1 year ago

Some consumers, e.g. customers of Octopus energy, choose to pay half-hourly retail prices which shift as that auction spot price shifts.

Octopus isn't allowed to pass on the full burden (e.g. if the spot price soars to £5000 per MWh, which is crazy, Octopus has to eat that and charge their customers £1 per kWh as promised. even though that's much less than £5000 per MWh) and of course they want a profit (say spot price is £150 per MWh, Octopus charges 18p per kWh, they kept a few pence for operating costs and profit) but if you are able to react nimbly then this allows you to get a significantly better deal than if you're paying a fixed rate.

This is possible because of Smart Meters. The meter sends your usage, not once a month, or even once a day, but every half hour, so they can bill you 2p per kWh at 3am but 35p per kWh at 5pm reflecting the very different energy profiles and production.

rjwilmsi|1 year ago

Yes, I'm aware of the Agile Octopus tariff etc. but answered based on what >95% of UK retail consumers are doing.

From historical data, Octopus would also pass on a negative spot price to customers on that tariff so consumers could sometimes get paid to use electricity.

As you say I'd imagine that certain customers with high flexibility, maybe/particularly those with some battery storage (or an EV to charge), could make huge savings.

I don't know what sort of margin Octopus apply on that tariff, I expect it's a bit higher than the 3 p / kWh you suggest (when normal tariffs would average something like 15 p / kWh difference between average wholesale and retail).