Interview: How solar, storage and wholesale pricing can deliver a win for households

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pv magazine: You recently took to Twitter to post about the wholesale electricity spike that was experienced on the NEM. What were the conditions that drove the price spike?

Chris Thompson: January 24th was a pretty challenging time for the electricity system in SA and Victoria. Extremely hot temperatures late into the evening drove high demand for electricity, and several major coal plants were offline due to maintenance, which stretched the electricity system right to the edge.

How did it impact Amber Electric customers?

Amber customers get direct access to wholesale prices for any electricity they import or export, for customers with solar. Typically, in South Australia this means prices that are 20-30% lower than traditional retail prices. During times of very tight demand, Amber customers are incentivised by high wholesale prices to use less electricity and export more electricity if they have solar.

During the Jan 24 spike, 30% of our customers, which means  around 60% of those who have solar, made money during the event, with the highest earning almost $150 during the spike

The spike also highlighted the potential downsides though – as using power during this period would mean losing up to 3 months of savings. As protection for our customers during these events, we apply a cap of 40c/kWh for monthly average prices, so customers who need to use power aren’t overly exposed

How could have the impact of the price spike be avoided by households? By Amber Electric itself?

We notified customers of the potential of this spike in the morning of the 24th, and encouraged customers where safe and convenient to take action to reduce usage. For some customers, this included turning up the air-conditioning earlier in the afternoon, then reducing it during the peak times. For others, this meant ensuring the washing machines / dishwashers weren’t running during this period. And for some it even included heading to the beach to maximise their savings / earnings!

We’re really focused on ensuring we make these kind of actions as easy for customers as possible in the future, which includes offering home-automation services to help customers adjust to these kind of events as painlessly as possible.

How did it impact on Amber Electric’s bottom line?

We operate on a flat $10 a month fee, which means we don’t profit from customers usage or exports. It’s really important to use that our only incentive is to help our customers reduce their bills, which means we don’t have a financial incentive either way.

You wrote of the importance in forecasting in the future. How difficult is this? Is this further complicated by unscheduled outages at established coal generators?

It’s pretty challenging in the market, especially in these tight circumstances where small increases in demand or decreases in supply can have an outsized impact on market stability and prices. Unscheduled outages obviously add an extra degree of uncertainty.

How different were the impacts of the pricing event for solar households? What role could have a solar+battery storage system could have made?

Pretty different – for those customers with solar or solar+battery, then situations like this become an opportunity to help support the grid and make a solid profit. Some of our customers earned over $150 during this event, and with batteries we’d see the potential earnings to be over $300. And the benefit is that these customers are then helping to keep the lights on for everyone.

Why is that you believe that retail pricing that is more reflective of wholesale markets is an important addition to the electricity market?

These kind of events are pretty rare, but obviously it’s incredibly valuable to everyone when customers are incentivised to use less and export more during times of grid stress.

Ultimately though, the most important contribution from the Amber wholesale pricing model comes every day of the year: we create a 100% transparent pricing model that customers can trust, and we enable customers to save $100’s each year, and support renewable power, by using more power during cheap renewable time periods, and become less reliant on coal produced power.