We pay 12p / kWh for electricity - thanks to a smart tariff and battery

https://shkspr.mobi/blog/2024/01/we-pay-12p-kwh-for-electricity-thanks-to-a-smart-tariff-and-battery/

I love my solar panels. But the solar panels don't love the British midwinter. Most of the year, my panels produce more electricity than I can use. But in winter we're lucky if they produce 3kWh per day - and most of the time it is considerably less.

So our winter electricity bills must be massive, right?

Nope.

The normal cost per kWh is 28.5p (including VAT). We're paying less than half that - 12.4p per kWh.

This is thanks to two things - a smart tariff and a home battery.

The Octopus smart tariff charges us a variable amount throughout the day. Every 30 minutes the prices change to reflect the demands on the grid. During peak times, it can go as high as £1/kWh. That's a good incentive not to run the tumble-dryer at the same time as the rest of the country is cooking dinner!

During quieter times, the price of electricity drops - there isn't much demand at 3AM so prices fall. Sometimes they fall to zero. Other times, they fall into negative territory and we get paid to use electricity.

Now, that's all well and good, but most people don't want to shift their consumption habits. The dishwasher goes on when it is full and dinner is cooked before Coronation Street starts. That's where the battery comes in.

We have a 4.8kWh battery. It is hooked up to the Internet and knows what our energy prices are minute-to-minute. When electricity is cheap, it charges up from the grid. When electricity is expensive, it discharges into our home. If we boil the kettle at 7pm, the sensors on the battery detect that we're using expensive electricity and starts outputting stored electricity.

Essentially, we don't have to alter our lifestyle at all. Here's a typical December day. The graph is quite complicated, so let me step you through it.

The bottom graph shows how expensive it is to buy electricity throughout the day. As you can see, there is a peak in the early evening when electricity becomes expensive.

The top graph has two interesting lines on it. The purple line shows how much electricity we're drawing from the grid, the blue line shows what the battery is doing. Early in the morning electricity is cheap - you can see the purple line rising as the blue line falls. That shows the battery is charging. You will notice that it only charges at the cheapest possible times.

In the evening, you can see the purple line dip to zero and the blue line rise. That shows the battery is discharging into our home and there in no electricity being purchased from the grid. There's a similar dip at about 0830 when there's a little spike in price. Clever battery!

I want to stress that is is all automated. I don't have to do a single thing. The battery speaks directly to my electricity provider to get the half-hourly costs. The battery can predict what our usage will be, but keeps most of the electricity for the expensive times of day. Our smart meter sends our usage back to the energy company automatically.

Savings

Against a normal tariff of 28.5p/kWh, I'm paying 12.4p/kWh. That's a saving of 16.1p/kWh.

The bill above shows 320kWh per month, which means a saving of £51 from the electricity I buy. That's approximately a 55% discount.

We've had that battery since August, so about 5 months. In that time it has saved us approximately 500kWh. We only moved onto the smart tariff a few months ago, so work out the savings there is complex - but I estimate it's about £130.

December is a high use month (lots of lights on and oven cooking). During summer, the battery mostly fills up with free solar power. It is hard to predict exactly what we'll save in a year, but it should easily shave 50% off our electricity bills.

Cost

But, of course, there's no such thing as a free lunch. Our 4.8kWh battery cost about £2,700 to supply and install. That's a large chunk of change. Based on our current projections, its payback period should be about 7 years. Of course, if electricity prices rise significantly, the payback period will shorten.

Solar panels are also expensive to install - between £4,000 and £12,000 depending on your property and how complex your roof is. They mean we pay virtually nothing for electricity in spring and summer. Again, the payback period is under a decade.

We can also sell our excess solar back to the grid. In theory we could also buy cheap electricity in the morning, store it in the battery, and then sell it back at peak times. In practice it isn't worth it; the cost of buying electricity at peak is higher than the price we could sell it for. So it makes sense to use the power rather than selling it.

If you can afford the large up-front capital costs, solar + battery allows you to make massive savings with a dynamic tariff. In times of solar excess, we pay close to nothing per kWh. In winter, we shift our consumption to pay at the cheap rate.

Effectively, it's like pre-purchasing all your electricity for the next decade.

Final thoughts

There's no doubt that the cost makes this prohibitive to many people. Ideally, the state should be mandating that all new homes have solar panels and space for optional batteries. We also need V2G (Vehicle to Grid) to allow electric cars to act as home batteries.

But there's no doubt that these technologies actually work! Yes, solar works in rainy London. And, yes, even fairly small batteries can make a significant difference in winter. We're on the cusp of a domestic energy revolution. When coupled with a smart tariff, it means people don't have to change the way they behave in order to save energy.