Octopus Energy - Unethical price changes for solar generators

DettaWalker

Disclaimer: I understand there are people struggling to pay their utility bills and the price changes will have a large impact on their ability to buy food. I am privileged not to have this struggle. Having said that, when I see unethical behaviour against consumers, I want to call it out.

So here's a bit of a rant about Octopus' Flux tariff for solar generators. They just sent the import & export rates for October++ and positioned it as a positive change. It isn't. 

They have introduced three negative changes:

• ‘day’ export rates have gone down 13.3% despite prices having increased 10%
• ‘flux’ import rates have gone up, so that buying energy at night and selling it during the day is now done at a loss despite it benefiting the grid
• Export rate ‘boosts’ have been applied to peak hours only, which are after sundown and thus meaningless for generators.

 

In Detail:

To contrast the reduction of day export rates, OE 'boosted' peak export rates (4-7PM). This does not benefit solar generators over winter as there is no meaningful production after 4PM during the autumn and winter months. Even now, in September in the south of England, export drops off despite clear skies at 5pm. Therefore, this export bump is an empty gesture.

Which leads to the conclusion that boosting peak export rates is used as a distraction tactic, to hide the real whammy of this change: despite energy prices going up 10%, export day rates are going down 13.3%. This is unethical and unless there is a good reason, one might think this is purely profiteering. 

When rising energy prices result in the reduction of the day export rates and falling energy prices result in the reduction of the day export rates, there is no scenario left where prosumers (consumers who produce energy) will see an increase in their day export rates. There is a large upfront expenditure to become a generator, with margins already being very slim. Now what little margin is left is shifted to the energy supplier. Not a good look from a company that portrays itself as good.

And the double whammy is in the detail: Whilst previously it was profitable or at least neutral to buy cheap energy off the grid during the flux rate (night 2-5am) and sell excess solar generation during the day at the day rate, it is now punishing generators with a battery set up to purchase energy off the grid when it isn’t needed, and resupply when it is, thus helping balancing the highs and lows of supply and demand. 

I just cannot believe that rising energy prices leads to a reduction of export tariffs. Make it make sense. From my perspective, it's just shifting margin from prosumers to octopus in a very obvious move.

badmemory

I suspect that the more of us get solar then the more this sort of thing will happen.  Thanks for letting me know who not to go with when I finally get my export paperwork through.

mmmmikey

There's a lot of emotive language here. There's really nothing unethical going on. 

Octopus are simply changing the rates of one of their tariffs which is something all suppliers do from time to time. We have no idea what's driving that - for all we know it could be that they are making losses at the current rates and tweaking them accordingly. Nothing wrong with that, it's how all businesses work.

You are perfectly free to choose an alternative tariff or supplier if Flux no longer works out best for you. I haven't seen the rate changes yet. If Flux still works out best for me I'll stick with it. If there's a better deal out there I'll change.

badmemory

Still trying to work out what was emotive about that but nevermind.  But it is the sort of thing any supplier does when they think they have got a captive audience as we all have experience of.

DettaWalker

mmmmikey said:

There's a lot of emotive language here. There's really nothing unethical going on. 

Octopus are simply changing the rates of one of their tariffs which is something all suppliers do from time to time. We have no idea what's driving that - for all we know it could be that they are making losses at the current rates and tweaking them accordingly. Nothing wrong with that, it's how all businesses work.

You are perfectly free to choose an alternative tariff or supplier if Flux no longer works out best for you. I haven't seen the rate changes yet. If Flux still works out best for me I'll stick with it. If there's a better deal out there I'll change.

When you say they are simply changing their rates which all suppliers do from time to time, you're not saying anything other than stating the obvious. I've seen many rate shifts over the years, and this is the first time where they are dropping export prices significantly whilst hiking all prices. 

They have communicated that the reason for change is the energy price cap going up, to reflect the rising energy wholesale prices. 

The cost of installation is with the home owner, not the energy supplier, as you know. So it's not they have any CAPEX on home solar installations - in fact they are selling them at a profit. 
 
Assuming you are correct, that they are making losses at current price caps vs going market rates for energy (which are quickly changing, depending on supply factors), then we need to look further as to why they are doing this to determine whether passing on their problem onto the prosumer is ethical or unethical. 
The fact is that renewable energy is cheap. gas powered power plants are what's driving the price increase.  Please google, plenty or articles out there and I worked in the industry of renewables a couple of years back, when production cost of 1kwh on a wind turbine was roughly 5p/kwh, IIRC. Which is why a lot of companies had a windfall (including oil & gas producers).
Octopus energy cannot dictate energy wholesale prices. The only 'supplier' they can dictate prices to are prosumers signed up to their tariff. So if indeed they are making losses (they were profitable last year, despite turbulence) on buying energy on the wholesale market, then they are now shifting part of the loss making equation (customer demand in KWH x average KWH wholesale price > customer demand in KWH x average price paid per kwh) onto the prosumers. And they are doing this whilst positioning themselves as white knights, serving the very people they are shifting part of their cost problem to. That is what I have a problem with.  
And to add to that, they are positioning increased export rates after sundown as a benefit to solar generators. It's just insulting people's intelligence. 

If you have a counter argument, please make it. 

Just go elsewhere doesn't add anything to the discussion.

matt_drummer

DettaWalker said:

mmmmikey said:

There's a lot of emotive language here. There's really nothing unethical going on. 

Octopus are simply changing the rates of one of their tariffs which is something all suppliers do from time to time. We have no idea what's driving that - for all we know it could be that they are making losses at the current rates and tweaking them accordingly. Nothing wrong with that, it's how all businesses work.

You are perfectly free to choose an alternative tariff or supplier if Flux no longer works out best for you. I haven't seen the rate changes yet. If Flux still works out best for me I'll stick with it. If there's a better deal out there I'll change.

When you say they are simply changing their rates which all suppliers do from time to time, you're not saying anything other than stating the obvious. I've seen many rate shifts over the years, and this is the first time where they are dropping export prices significantly whilst hiking all prices. 

They have communicated that the reason for change is the energy price cap going up, to reflect the rising energy wholesale prices. 

The cost of installation is with the home owner, not the energy supplier, as you know. So it's not they have any CAPEX on home solar installations - in fact they are selling them at a profit. 
 
Assuming you are correct, that they are making losses at current price caps vs going market rates for energy (which are quickly changing, depending on supply factors), then we need to look further as to why they are doing this to determine whether passing on their problem onto the prosumer is ethical or unethical. 
The fact is that renewable energy is cheap. gas powered power plants are what's driving the price increase.  Please google, plenty or articles out there and I worked in the industry of renewables a couple of years back, when production cost of 1kwh on a wind turbine was roughly 5p/kwh, IIRC. Which is why a lot of companies had a windfall (including oil & gas producers).
Octopus energy cannot dictate energy wholesale prices. The only 'supplier' they can dictate prices to are prosumers signed up to their tariff. So if indeed they are making losses (they were profitable last year, despite turbulence) on buying energy on the wholesale market, then they are now shifting part of the loss making equation (customer demand in KWH x average KWH wholesale price > customer demand in KWH x average price paid per kwh) onto the prosumers. And they are doing this whilst positioning themselves as white knights, serving the very people they are shifting part of their cost problem to. That is what I have a problem with.  
And to add to that, they are positioning increased export rates after sundown as a benefit to solar generators. It's just insulting people's intelligence. 

If you have a counter argument, please make it. 

Just go elsewhere doesn't add anything to the discussion.

They may have been buying your excess solar generation and selling it at a loss, break even or profit, we don't know

Maybe they can buy cheaper now than before so have reduced what they pay you.

You are not a business but they are. You didn't install solar panels to operate as a business.

Making a profit is ethical believe it or not.

What they need to charge you for imports is not necessarily tied to what they can pay you for exports, things change.

The rates they have been paying for solar exports has been pretty generous. They still pay me more for exports than they charge me for imports and they will continue to do that after 1 October 2024.

I bet I get paid more per kWh generated than any commercial enterprise and we pay no tax on our profits. Its a pretty good deal.

debitcardmayhem

I haven’t seen Octopus’ new flux rates yet, but i can export plenty between 4-7, and then top up my battery between 0200-0500. I would be interested to know what figure you have been given for flux export. I seem to remember when the cap went down import went down by a larger % than export, but my memory often plays tricks on me.

laidbackgjr

These are the rate changes for the Merseyside / North Wales area

Export Peak from 23.875p to 27.331p
Export Flux from 5.295p to 5.050p
Export Day from 15.811p to 13.703p

Import SC from 64.974p to 65.835p
Import Peak from 32.515p to 35.541p
Import Flux from 13.935p to 15.232p
Import Day from 23.225p to 25.387p

Given flux is aimed at solar & battery customers - as long as you charge at the Flux rate and sell at the Peak rate it's still a great tariff - in fact the gap between Flux & Peak has increased by around 2

Not seeing any great reason to change - just continue what we do with battery charge / discharge and the tariff works well for you.

Hoenir

DettaWalker said:

 despite energy prices going up 10%, export day rates are going down 13.3%. 

OVO are offering me money back if our overall consumtion uses less peak rate (6 -9) and more off peak electricity. Safe to assume that solar panels in the summer daytime are generating power that there's no demand for. Large commercial users are increasingly investing in house generation themselves , e.g. supermarkets. 

born_again

TBH, given all the free electric hours & greener days of late. Clearly there is a lot of paid for from the large producers of solar & wind generation. So would seem to be a business decision to cut the amount paid to personal generators. Who could use it other ways to reduce their costs.

matt_drummer

As more and more domestic solar installations come online a surplus of generation will arise.

Nobody wants it so the price goes down.

That's `business'!