Octopus Energy - Unethical price changes for solar generators

badmemory

It will of course make domestic solar less viable.

mmmmikey

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.

You might think that "just go elsewhere" doesn't add to the discussion, but if you don't like the changes why not "just go elsewhere"? I really think you've overcomplicated these modest price changes in some ways and oversimplified them in others.

On the one hand, as I have suggested if you don't like the new charging structure you can change tarriff or supplier. I don't think there is anything remotely unethical about Octopus's price changes. If the new pricing structure is no longer competitive for you, you are absolutely free to change without penalty. It's not like the SVR which is highly regulated because some customers are effectively trapped in. 

This is just a free market tariff and Octopus are free to put up costs as much as they want because anyone who doesn't want to pay can change. Or they can reduce costs to a point where they don't actually make a profit in order to attract new customers or grow a specific part of the business. All this is just normal day-to-day business for any commercial organisation and in no way unethical. All kinds of things effect the pricing decisions, not just the cost of running the business.

I also note that you refer to "prosumers" and I presume by that you are alluding to the fact that Flux is a specialist tarriff more suited to consumers with a good knowledge of what they are buying. If so, I think you have pretty well hit the nail on the head with that. 

But unfortunately, and with that in mind, I think you may not have fully understood the tariff yourself and it might not be the best tariff for you. You say:

"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. "

What you seem to have missed is that Flux is designed for owners of solar panels AND battery systems and are sufficiently "prosumer" to understand them and use them to good effect. The idea is that you charge the battery with solar during the day and then force it to discharge during the peak period to take advantage of the better rates. Ideally, you would manage your battery so it reaches a fully discharged state at the end of the peak period. If that means you have to buy electricity in the evening, it still works to your advantage to fully discharge the battery because you will effectively be buying back energy at a lower price than you sold it for. So far from "insulting people's intelligence" it's actually something that will benefit anyone who is using their battery optimally, and in some ways is possibly more significant over the winter months than the changes to the daytime export rate. It certainly is for me - I will gain more by exporting during the peak period than I will lose during sunlight hours. (If you want some help getting your system set up to make better use of the tariff then it might be worth raising that in another thread. I'm sure there's lots of folk where who will be happy to share their strategies with you.)

In a similar vein, I don't think you've fully understood how energy pricing works either. You talk about "energy costs going up" and seem to have made the (not unreasonable but nevertheless wrong) assumption that that automatically means the value of solar exports to Octopus have gone up as well. You haven't really allowed for the fact that although average costs may have gone up there is a huge amount of variation within that average, based on how far in advance you contract to buy that energy and the time of day. In order to understand how much your solar energy is worth to Octopus you'd first need to know how and when they buy their energy. Then you need to consider that solar generation is so unpredictable in the winter months that it is a lot less valuable because it cannot be relied upon.

And of course, you also don't know how Octopus's customers use Flux, which bits make money, which bits lose money and so on. And how much of the "free" energy that Octopus gave away during the recent promotion went to Flux users. And how much did Octopus lose on Flux before it became profitable (if indeed it is). And so on. And so on.

So in a nutshell, I think you have over-reacted to a fairly modest price rise due to a lack of understanding of both how to best use the tariff (it's not just about solar generation!) and how businesses set costs.

mmmmikey

Hi again, as a follow up to that last post, I've just done the sums and my rates have changed as follows:

Night time import up 9.8%
Peak period export up 14.4%

Overall I'll be very slightly worse off because I import more than I export in the winter months. The other rates are pretty much irrelevant as I do as much as I can (water heating, laundry, etc.) during the cheap period and use a combination of solar and battery power at other times. In the winter month, my battery is big enough to store most if not all.of the solar energy I don't use for export during the evening peak at the higher rate.

So all things considered I think I'll stick with Flux over the winter rather than change back to Tracker as originally intended. Be interested to know who's sticking and who's changing?

 How about you @DettaWalker , putting aside your frustrations at the change does this still work out best for you? Have you compared with anything else and if so what?

greenbee

Thanks for doing the maths @mmmmikey. I've been meaning to work it out - so far i've been discharging the battery at peak rate but trying to work it out so I leave enough capacity to get me through the night so I don't import anything in the evening. But you're right - I need to dump all the battery charge at peak rate (when I'm using very little as I'm still working), and then take the hit on the evening usage, while also making the most of the cheap rate.

I can set the DW and laundry on delayed start, but need to work out whether/when it is worth using the immersion at night rather than oil from the boiler (given the size of my oil tank, it may well be that the price is irrelevant - heating the tank via excess solar and cheap rate electricity will reduce oil consumption), and when it is worth using the towel rails in the heated bathroom and utility room overnight (clearly worth it for the unheated bathroom) to help maintain the temperature in the house and reduce oil usage - autumn and spring seem a logical time when the heating isn't on but towels still need to dry and a bit of heat during the night is helpful but not needed during the day. 

mmmmikey

greenbee said:

Thanks for doing the maths @mmmmikey. I've been meaning to work it out - so far i've been discharging the battery at peak rate but trying to work it out so I leave enough capacity to get me through the night so I don't import anything in the evening. But you're right - I need to dump all the battery charge at peak rate (when I'm using very little as I'm still working), and then take the hit on the evening usage, while also making the most of the cheap rate.

I can set the DW and laundry on delayed start, but need to work out whether/when it is worth using the immersion at night rather than oil from the boiler (given the size of my oil tank, it may well be that the price is irrelevant - heating the tank via excess solar and cheap rate electricity will reduce oil consumption), and when it is worth using the towel rails in the heated bathroom and utility room overnight (clearly worth it for the unheated bathroom) to help maintain the temperature in the house and reduce oil usage - autumn and spring seem a logical time when the heating isn't on but towels still need to dry and a bit of heat during the night is helpful but not needed during the day. 

Hi, it takes a bit of getting your head around - or it did for me at least

The other thing to think about is overnight charging the battery from the grid. I charge mind fully every night, even when I know it's going to be sunny the following day. On the face of it, that means you don't have any capacity left to store any solar you don't use. But the income you get from exporting the solar pretty much cancels out whatever you've spent unnecessarily overnight. This has changed marginally with the new rates but not by enough to be particularly significant. The advantage of doing this is you have a full battery for anything you use before sunrise, and on a grey winters day when there isn't enough solar you can use cheap overnight energy from the battery instead.

My battery schedule looks like this:

02:00 set battery to charge from the grid - this also means anything else like water heating will use grid power
05:00 set battery to normal - i.e. anything running will take energy from the battery if there is some. and this will be replenished with solar energy
16:00 set battery to force discharge - anything running at this time takes energy from the battery and anything left over is exported to the grid
17:15 set battery to only discharge - the battery will supply anything that needs it but any solar energy will go to the grid to take advantage of the peak rate rather than charge the battery
19:00 set battery to normal - anything left in the battery is used up during the evening and by the time 02:00 comes round the battery is ready to take a full charge again

The only part of this that needs careful monitoring is the 17:15 only discharge timing. If I set this too early then I'm missing out on peak rate export. But if I set it too late I run the risk of buying mega expensive peak rate import.

Hope this makes sense and is helpful. Honestly not sure whether I'm sharing something useful here or stating something that is obvious (although it wasn't to me). And maybe others have better schedules or strategies they could share.

If it's useful I can also share my schedule for the free energy days, which is modified so I can charge the battery using free energy from 13:00 to 14:00.

p.s. @DettaWalker hopefully this isn't drifting too far from you original post but it seems relevant and may be of help to you?

greenbee

That's really helpful. I always struggle with the maths (or knowing where to start with it). 

I've been forcing discharge during peak rate, and setting alarms to check manually how much is left every 30 minutes. I don't use much then even in winter as I'm still chained to my desk at that point - so base load plus laptop, docking station, a couple of monitors, and maybe a light. After that there's a bit more use - more lights, and probably some cooking as it gets colder and there's more need for hot meals rather than salads.

However, I'd been thinking more about self-sufficiency and having enough battery to get through until the battery starts charging in the morning, and it looks like that might not be the best option financially (although I then risk being in a position where the battery is empty in a power cut when I need to use the EPS!).

I'm still finding my way around the myenergi libbi controls - tariffs are set (I add and remove the 'free' period at 1p when they announce them) so setting 'charge to grid' imports at cheap rate. I just need to check that if I drain the battery at peak rate it won't try to charge before cheap rate in which case I either need to leave enough to last until 2am or switch the battery off once it has discharged and turn it on when I go to bed. I'm not ready to spend time with home assistant to automate it - and I only have an 'export' option, I don't seem to have a 'discharge only' option. I also need to re-read the instructions for setting priorities between the battery and the hot water diverter - but I know I can schedule the immersion to boost at night, so probably need to get that done.

I can see that it'll be worth spending some time working out how to optimise this over the winter - before deciding whether to add east and west facing panels to extend generation time. 

DettaWalker

matt_drummer said:

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.

That's what I thought at first, until I found out about how the energy wholesale market works:

https://commonslibrary.parliament.uk/why-is-cheap-renewable-electricity-so-expensive/

The most expensive unit needed to match demand sets the price to the buyer (like Octopus) - the most expensive being fossil fuel generated energy. Scroll down to "Merit Order" and see for yourself. 
As there is considerably less (factor 10 to factor 20 in December) to no solar energy in the winter months, there is less renewable supply in the October-April period. Therefore energy prices go up in winter.

They pay me less for exports than they charge me for imports, significantly so. Who is your supplier?

To address your last point that we get paid more than market rates. That's a good point so I went to look it up. 

https://tradingeconomics.com/united-kingdom/electricity-price

Now, these are average daily rates, but still, looking at the highest point in the last 12 months, my day export rate was higher than market prices which seem to average around 7p/kwh. Therefore, I yield this point to you - you are correct. We get a good deal in comparison to others. Whether I turn a profit with my installation, once taking inflation into consideration is a different question, and for my set up yet to be observed, but considering the payback period, a global tracker would very likely outperform my solar installation, but my ISA allowances already get used up so that's not that much of an option as I'd have to pay tax on returns.  

matt_drummer

DettaWalker said:

matt_drummer said:

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.

That's what I thought at first, until I found out about how the energy wholesale market works:

https://commonslibrary.parliament.uk/why-is-cheap-renewable-electricity-so-expensive/

The most expensive unit needed to match demand sets the price to the buyer (like Octopus) - the most expensive being fossil fuel generated energy. Scroll down to "Merit Order" and see for yourself. 
As there is considerably less (factor 10 to factor 20 in December) to no solar energy in the winter months, there is less renewable supply in the October-April period. Therefore energy prices go up in winter.

They pay me less for exports than they charge me for imports, significantly so. Who is your supplier?

To address your last point that we get paid more than market rates. That's a good point so I went to look it up. 

https://tradingeconomics.com/united-kingdom/electricity-price

Now, these are average daily rates, but still, looking at the highest point in the last 12 months, my day export rate was higher than market prices which seem to average around 7p/kwh. Therefore, I yield this point to you - you are correct. We get a good deal in comparison to others. Whether I turn a profit with my installation, once taking inflation into consideration is a different question, and for my set up yet to be observed, but considering the payback period, a global tracker would very likely outperform my solar installation, but my ISA allowances already get used up so that's not that much of an option as I'd have to pay tax on returns.  

My supplier is Octopus.

I pay 11.46p for imports and get 15p for exports. I do have battery storage, but that is what Octopus get/give me during the course of a year.

I am aware of how electricity is priced.

But that price varies all the time I think?

And when there;'s lots of sun for you, there's lots of sun for many others too.

At times, there is so much excess wind and solar that Octopus pay customers to use electricity.

At the same time they still have to buy your electricity when they already have too much, they're not making a profit on that!

It all gets really complicated, it's not just buy from you at X and sell for Y, there are lots of other influences.

My solar panels will pay for themselves easily over their lifetime.

I'm sure you do this, but in calculating the pay back time you have to take account of electricity generated that you consume yourself in addition to what you get paid for exporting.

There is also an element of insurance from any future price rises, at least in part.

greenbee

I suspect that much like FIT payments, some of the tariffs (along with the free electricity sessions and winter saving sessions) are designed to help change customer behaviour and will alter over time as people get used to load shifting (or more smart devices in the home can be configured to take advantage of TOU tariffs. 

Scot_39

Try thinking about the rest system - beyond your meter - beyond your own self interest.

There is nothing unethical going on, just a supplier rebalancing prices in a highly complex marketplace - where prices shift increasing dramatically with a higher renewables share - on a 1/2 hourly basis.

Take a look at say average Agile pricing - you will see a mini peak breakfast time a big peak at early evening and lows in between - more so in summer - and overnight.

Dynamic pricing - slot to slot and day to day - that Octopus itself, with customers on Agile tracker in particular - but also even daily Tracker itself - find themselves more exposed to than all other major UK suppliers

And remember the UK system - was never designed to cope with large volumes of micro generation points at LV local distribution level.

Domestic Solar is therefore not the saviour of the grid you imagine it to be - at the national or at the local distribution network level.

Yes it can reduce demand - but parts of the year in uk - not at the peak times - specifically in winter.

But the export of GW (1.5m homes at average 3.7kWp iirc = potentially 5.5GW) does in fact at times and in places cause real local distribution issues that cost to deal with.

And if they weren't - a modern solar invertor system would shut itself down from exporting ultimately to avoid local voltage caps being violated - as they have found in other nations with poorer earlier generation domestic system controls.  Check your system alarms - it may even be happening right now - it has to others posting here.

And in summer wholesale rates often don't justify high rates paid for export at low demand points.

When again Octopus in particular unlike many other suppliers - itself charges lower than many export rates to it's own Agile customers on sunny windy days.

So yes your rates will shift and continue to do so in future as more renewables (10s GW currently licensed in next few years - thats proper grid level renewables - arguably easier to measure and easier to regulate / demand balance ) - come on stream reduce demand for it  - or increase relative to (future increases) demand - but only when times match.

And arguably should be as dynamic as those of Agile.  To reflect the lows of 1/2 hourly wholesale market rates.

And in winter - with peak domestic demand in the c5-6pm slot - solar is far from the solution for reducing current uk peak demand.

And will do nothing to reduce the increased demand for evening and early morning electric heating as gch demise continues and overnight EV charging - except those who also invest £1000s in battery tech.  Who therefore wont be exporting as much - and helping grid peak demands less in autumn/ spring / summer as well.

I'd be far happier if domestic export rates went -ve - when ever there is excess commercial renewables and core generation available.  Because then it's just potentially an additional balancing cost / standby cost - for the rest of us.