How do we get charged the way we use electricity.Is it time of Use vs flat rate electricity tariffs as stipulated by the electric company or there are doubts.
anyway lets clarify it.
If you’re connected to the grid and own your home, you pay for electricity. In most places, in Australia, there are basically two types of tariffs:
In this article we take a look at both of these tariff types and how well they work with solar & batteries.
Congratulations! By asking this question you’re one step closer to taking control of your energy bills. Unfortunately, most people don’t know which type of tariff they’re on, which means that most people are not in a good position to effectively deal with the challenge of reducing their bills.
You can find out which type of tariff you’re on by doing any of the following:
Here’s the deal in a nutshell: With a flat rate tariff, you have no incentive to shift your electricity consumption to different times of day to save money (unless you’ve got solar – in which case you should aim to put your solar power to use by using appliances during the day).
On a TOU tariff, however, you can save money by running appliances when grid electricity is cheaper – usually early mornings or late at night. If you run these devices during ‘peak times’, you’ll pay more. This is why TOU tariffs are sometimes referred to as ‘flexible’ tariffs: they give you an option to save money by changing your behavior (where convenient).
A typical schedule for a TOU tariff. (Example via Energy Australia.)
Most Australians are on flat tariffs, so typically the question (if the option is considered at all) is about whether to switch to TOU billing or stay with a flat rate. In which case you’ll want to ask yourself:
Also keep in mind that you can ask your retailer for your half-hourly energy consumption data and they’re obliged to give it to you (if you have an interval-tracking meter, that is). Many energy monitoring systems will also allow you to get a detailed understanding of your consumption habits.
A definitive answer about which is better for your home comes down to both how you respond to the questions above, as well as whether you’ve got solar panels and battery storage. Unfortunately, we can’t say out of the blue which one would be better for you, but we can point out some tools that might help.
Not all retail electricity plans are created equal – retailers set their rates as they see fit in most places in Australia, which means you’ve got to shop around, whether you’re looking at flat rate plans or TOU plans.
TOU plans can be particularly tricky to navigate, however, because there are more variables involved. For example, you might have a plan where the c/kWh price difference between peak, shoulder & off-peak rates is relatively small (e.g. 32c/kWh, 23c/kWh and 18c/kWh, respectively). Meanwhile, another plan where there’s a large difference between rates – say 40c/kWh for peak, 18c/kWh for shoulder and 15c/kWh for off-peak. The latter plan offers more opportunity for savings if you manage to shift your consumption to off-peak & shoulder times, but could end up being pricier if your consumption habits are pretty inflexible.
Saving even more with tariff arbitrage & batteries
If you’re on TOU billing and have battery storage, ‘tariff arbitrage‘ is a cool trick that you can do to save a bit of extra money by playing the differential between your off peak vs peak/shoulder rates. Basically, you charge up your batteries using early morning off-peak rates in preparation for a cloudy or rainy day, when you won’t have as much solar energy available. This functionality generally requires an energy management system or smart inverter. (You can also check out our previous article about whether you might be better off on TOU or flat rate with batteries.)
You always have a choice – but whether you have to pay for it depends on the physical metering device(s) that are wired up to your home.
If you a hard-wired metering setup (which could be analog or digital), then switching will require an electrician to come out to your home to physically switch over your metering gear – which will cost you money in most cases. Keep these potential charges in mind when trying to work out whether working out whether a switch is worth it for you.
If you have a smart meter your retailer or network company might be able to switch you over remotely for a small fee or for free – although they may limit the number of times per year you can make this request.
We’ve talked a lot here in hypotheticals, so we decided to run some numbers using our Solar & Battery Calculator to see how a range of different situations in Brisbane & Sydney square up against one another.
(We also tried looking at Melbourne but the retail markets vary so widely as to make an indicative, at-a-glance comparison very tricky to do – check out SwitchOn.vic.gov.au to have a go at it yourself. Similarly, Adelaide really only has one TOU offer at this point in time, and it’s coupled with a demand charge, making it extra hard to meaningfully model.)
The results are contained in the table below (which you can click to enlarge). We know it looks pretty dense & confusing, so we’ve expanded on it a bit below as well.
A comparison of estimated annual electricity bills for Sydney & Brisbane, by tariff type and solar/battery situation. Red indicates higher bill, while green indicates lower for each situation. We’ve also included the estimated difference between TOU & flat rate for each situation, which is colour-coded from white (smallest difference) to orange (largest difference). You can find the electricity price structures that we used here. Note that these estimates don’t include fixed daily supply charges, although we have added on the ‘supply charge premium’ that applies to some TOU plans where applicable (typically about 10c/day). (Click to enlarge.)
Tariffs are bloody complicated! But don’t lose heart – you’re probably fine on whichever type you’re already on. The most important thing is that you understand:
We wish you luck with it all! (And feel free to give us a shout if you think you might need a hand – email@example.com.)
© 2019 Solar Choice Pty Ltd
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