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Why do you get paid less for the electricity you sell?


This is a very common question and to answer it you first need to know a little bit about the electricity industry.

The price of actual electricity is only a small portion of your bill.  An electricity bill, whether you see it or not, is actually comprised of multiple separate charges including:

Most retailers, to make things easy, usually combine these charges into a simplified fixed charges (usually daily) and variable charges (price per unit of electricity) pricing plan.  But even so, all of the above charges are accounted for in that plan.

We offer a plan where we separate all of these various charges on our invoices.

The Reason Why

Buying Electricity
When you buy electricity, you are paying for the actual electricity plus the network's charges, the retailer's charges and the Electricity Authority's Levy.

Selling Electricity
When you sell electricity, you are usually only getting credited the price of the actual electricity.  However in saying that, some networks do charge you a fee to transport your surplus electricity to be sold.   In a sense, you could consider them like a courier service delivering your sold product for you.  After all, you are using their services (power lines, transformers etc) to deliver your product to be sold. 

Some networks "penalise" you for installing solar.  Their argument is that you do not reduce the demand on the network at peak times.  Which, unless you have sufficient battery storage, is true.  Networks are designed to cope with peak demand (early morning when most people get up and early evening when they go home).  Installing solar does not necessarily reduce the demand at peak and therefore they argue that solar customers get an unfair advantage.  Of course the solution to this is to enforce time-of-use rates (different rates dependent on when you use your electricity) - which is where things seem to be heading anyway.

Example

Say you are on a pricing plan with your electricity retailer where they charge you 30c for every unit that you consume and pay you 8c for every unit you sell (we'll ignore fixed charges for now).

And let's say you, in a particular month, buy 500 units and sell 500 units of electricity.  So you have actually generated enough electricity to be "self sufficient".

The price of buying
Your buy rate will be split up into roughly something like the following:

  1. Price of the actual electricity e.g. 8c per unit
  2. Network's transport charge e.g. 16c per unit
  3. Retailer's charge and Electricity Authority's levy e.g. 6c per unit.

The credit of selling
Your sell rate will usually only be the price of the actual electricity only.

  1. Price of electricity e.g. 8c per unit.

Result

So even though you have generated enough electricity to be self-sufficient your bill will still be:

Debit: 500 x 30c = $150
Credit:  500 x 8c = $40
--------------------------------
Total:  $110 to pay (saved $40).

How do you get rid of the extra buying charges?

There are only 4 ways:

  1. Consume the majority of your electricity while you are generating it.  This may be workable especially in a commercial application, or if there are things which can be operated mostly during the day and adding timers etc - spa pools, home heating and so on...
  2. Install a system which generates about 4x what you consume so that the sold electricity credits will offset the extra buying charges.
  3. Store your own generated electricity into batteries.
  4. Go off the grid.

 

 

 


About Us

We are an electricity retailer and solar installation company.

By combining wholesale energy with solar, we make people self-sufficient while still being connected to the grid.

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Tesla
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Enphase
Canadian Solar

Contact Information

    +64 7 595 0001

8 Hounsell Road
Burbush, Hamilton
New Zealand 3200

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