Getting a higher feed-in tariff from your electricity retailer looks great on paper, but it does not necessarily mean that you will save more money on your electricity bills. We’ve taken a look at a spread of retail electricity plans for solar customers in the Sydney area in order to determine who is actually offering the best deal for solar customers.
Recognising that things change quickly in this space, our plan is to publish updated versions of this analysis every three months; we will also publish similar articles for Australia’s other capital cities.
Disclaimer: While we have done our best to ensure the accuracy of our calculations and conclusions, we encourage you to do your own research (and maths) before making a decision about switching retail electricity plans. Also note that not all retail electricity plans are listed on EnergyMadeEasy.gov.au – and there may be other deals out there which we have not taken into account.
Getting the most out of solar panels without a generous feed-in tariff
NSW’s Solar Bonus Scheme – which offered 44c for every kilowatt-hour of solar energy they send into the grid – has been closed to new applicants since April of 2011. But solar installations have continued in the state even in the absence of this incentive, thanks mainly to the low cost of installing a system here – not to mention the high price of retail electricity from the grid.
Without the state-based solar feed-in incentive, however, solar system owners should be looking to maximise their solar self-consumption; every unit of solar energy self-consumed is one less unit that needs to be purchased from the grid. This means making sure that a) their solar system is appropriately sized, and b) that they understand how they are consuming electricity throughout the day, and therefore be able to take advantage of their solar energy while it is available. (Check out our solar PV system sizing tool.)
Not all homes self-consume all of their solar energy, however. In fact, virtually all solar homes end up sending at least a portion of their energy into the grid – with 30% or 50% solar export (or even more) not being uncommon even among homes without a feed-in tariff. Ideally, a home with solar can change their behaviour (or install battery storage) to reduce solar export to as little as 0%, thus maximising the value of their system.
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What factors we took into account
We recognise that many Sydney homes already have a solar system and may not be in a position to install batteries or significantly change their behaviour so that all of their solar energy is put to good use. In such instances, it becomes even more important that these homes are discriminating in their choice of electricity retailer – and it’s not all about how generous their feed-in tariff offering is.
Electricity pricing plans can be tricky to navigate, so we’ve crunched some numbers to determine which retail electricity plans actually offer the best value for solar customers in Sydney. We took a look at retail plans for solar customers on the government comparator site EnergyMadeEasy.gov.au to synthesize a meaningful comparison that takes into account more than just feed-in rates – whose benefit can easily be outweighed by higher usage charges, supply charges or even special fees that apply only to solar customers.
Here’s the main things we took into account:
- Feed-in tariff rate on offer
- Daily supply charges
- Usage charges (per kilowatt-hour, kWh)
- Additional fees for solar customers
- Applicable discounts
- Recent history of customer complaints (based on data from the Australian Energy Regulator)
What about environmental considerations?
While we recognise that environmental considerations are at the the top of the list for many solar system owners (and non-solar homes!), such considerations are outside the scope of this article. If you’re interested in comparing the environmental and ethical track records of various retailers, we recommend that you check out Ethical Switch or The Green Electricity Guide.
How we calculated our rankings
It’s difficult to determine unequivocally who the ‘best’ retailer is for solar customers, but our estimates should give readers a better feeling for the answer to this question than the results on EnergyMadeEasy do (their estimates do not take into account solar system size or solar self-consumption). Even still, it’s important to note that we can’t possibly model every scenario. Consuming more electricity and/or having a different size of solar system could change the outcomes again; as such please take all the results as indicative.
Please also note that many of the discounts are conditional (e.g. a ‘pay on time’ discount may not apply if you pay your bill late), and we have not taken into account additional fees for paying by credit card which some retailers levy. In essence, we’ve assumed that you will do everything possible to minimise costs through payment method and timing. This is important to remember because ‘pay on time’ discounts can be as high as 20% – which means you’d be in for some serious bill shock in the event that you were to miss a payment!
- We took a look at the 36x single-rate plans from 17x retailers that came up in a search for postcode 2193 (an example postcode from the Sydney area) on EnergyMadeEasy, and assumed that the home in question uses between 6,000 and 12,000 kWh per year (roughly 16 – 33kWh per day). We only took into account single (or ‘flat’) rate plans and did not consider time-of-use plans (which are generally better for homes with battery storage). We excluded offers that were not on offer to homes with existing solar systems or which did not include a feed-in tariff rate.
- We then examined outcomes for homes with a 1.5kW system, 2kW system, 3kW system, 4kW system or a 5kW system (three popular system sizes) based on 40%, 50%, and 70% solar self-consumption scenarios (‘high export’ to ‘low export’) – a total of 30 scenarios.
- Retailers were awarded a maximum of 60 points: 40 points for being ranked in the #1 spot, 25 points for being in the #2 spot, 15 points for being in the #3 spot, plus up to an additional 15 points for ranking in the top 5 for any situation.
- Up to an additional 5 points were given for customer service, with points being deduced in accordance with complaint data from the Australian Energy Regulator. We gave zero points where no complaint data was available, thus potentially giving a slight point advantage to a retailer with a lacklustre customer service record over a newer retailer that we know nothing about. (We encourage you to do your own research on their customer service record independently as well.)
- We did not take into account contract break fees, but we do mention them in the notes below. Some of the plans charge a flat fee for switching away to another plan before a set term is up, while others had no contract term at all. We are assuming here that you are a proactive shopper who will be reevaluating retail electricity plans periodically, and will switch away if something better comes along. Please keep cancellation fees in mind as you do your shopping.
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So what are the best retail electricity plans for solar in Sydney?
With all of the above in mind, below are the top 3 results of our modelling. Interestingly, each plan achieved its high rank thanks to a variety of factors – usually some combination of low usage & supply rates along with deep pay on time & direct debit discounts.
Red Energy: Living Energy Saver – Residential (RED168822MR)
Red Energy’s Living Energy Saver – Residential plan appeared in the Top 3 plans for every scenario that we modelled, and managed close to a perfect score (59.4/60 points). Their low supply & usage rates, combined with a 10% pay on time discount, make this plan the most competitive that we saw – hence its position at the top of our list.
Red Energy appears to have a solid customer service record, with a complaint rate of only 0.6% according to the AER – the 4th lowest of all the retailers who appeared on the EnergyMadeEasy comparison.
Key features of this plan:
- 5c/kWh feed-in tariff / solar buyback
- 10% discount on usage & supply charges (pay on time)
- Usage charges of about 21.2c/kWh (ex GST)
- Daily supply charge of 72c (ex GST)
- Prices are not fixed and may increase during the contract period (but not before 30 Nov 2016)
- Contract exit fee is $20
PowerShop: Standard Saver (POW162193MR)
PowerShop’s Standard Saver plan ranked solidly in the #2 spot for all of the scenarios we modelled. It’s very important for us to note that PowerShop is not your average retailer: they require a certain amount of engagement from their customers on a regular basis. As such, you must use PowerShop’s smart phone app to choose a ‘Power Pack’ to be applied to your bill each month. This gives engaged users the opportunity to save more money than they ordinarily would at other times (and potentially more than they would with the Red Energy plan mentioned above). The flipside is that those who forget or fail to apply a discount Power Pack may end up paying significantly more for their energy than they would otherwise – although PowerShop do go out of their way to make sure their customers understand how their system works so that they can maximise the benefits.
PowerShop prides itself in its customer service, and its complaints score with the AER seems to be a reflection of the fact that this is not just talk: At only 0.04%, PowerShop’s complaint rates were lower than any other retailer included in the EnergyMadeEasy comparison.
Key features of this plan:
- 7c/kWh feed-in tariff / solar buyback
- Up to 18% discount on usage charges (you must select an ‘Online Saver’ package each month to benefit from this discount; deeper discounts may be possible by selection of other packages)
- Usage charges of 23.4c/kWh (ex GST)
- Daily supply charge of 86c (ex GST)
- Prices are not fixed
- No contract cancellation / exit fees apply
Momentum Energy: Momentum SmilePower Plus GD (Anytime) (MOM184601MR)
With 29.6 out of a possible 60 points, Momentum’s SmilePower Plus GD (Anytime) plan comes in third place – with a few caveats. First of all, eligibility for this plan is subject to having the correct metering configuration (“Type 5 (MRIM & AMI) & Type 6 (BASIC) meters. Please contact us on 1800 SWITCH to verify your meter type.”) Secondly, prices may increase annually with the consumer price index (CPI). Thirdly, there was no feed-in tariff for new solar customers (i.e. those who don’t have access to a state-based feed-in tariff) listed on their rate sheet. Nevertheless, the competitive pricing for this plan could make it a compelling option for the right homes – the plan performed particularly well in scenarios for homes with 2-5kW solar systems and higher consumption levels. The reason is probably the unusual way that electricity usage is divided into tiers – with the first 6.6kWh of electricity for a day being charged at 23.4c/kWh, while tiers 2 and 3 are progressively cheaper (19.4 and 19.2c/kWh, respectively). Future price increases would presumably retain this kind of chunking.
Momentum Energy had a complaint rate of 0.65% – the 6th lowest of all the retailers who appeared on the EnergyMadeEasy comparison, and only a hair above the two before it.
Key features of this plan:
- solar feed-in tariff / buyback rate unclear (ask the retailer)
- 2% discount on usage charges (pay on time, pay online)
- Stepped usage charges of 24.4c/kWh (ex GST) for first 6.6kWh per day, then 19.4c for the next 15.3c/kWh and 19.2c/kWh for the remainder
- Daily supply charge of 75.7c (ex GST)
- 3-year contract with $90 exit fee in year 1
Other retailers who make the list
Dodo Power & Gas scored 20.4/60 points for their Ausgrid Res No Term Market Offer (E2EAR-MAT1) plan, which features relatively competitive rates and a pay on time discount of 20%.
Key takeaways (and some pointers)
- Our results show that a higher feed-in tariff does not necessarily mean a better deal for solar customers – but it helps.
- The best plan for you ultimately depends on your situation, but plans that rank well for value across a wide range of scenarios are probably the safest bet in case your consumption habits change. Generally speaking, there was an annual difference of about $30-$50 between the top two plans, followed by a gap of about $100 between #2 and #3.
- If you want to switch to one of these plans, make sure that you ask for the plan by its name – not just the retailer; many of the retailers have other plans that may not offer as much value as the ones we’ve highlighted.
- None of the plans we examined offer fixed prices – retail prices and associated savings may change (with notice to you) during the term of the contract; we suggest that you re-examine retailer offerings every 3-6 months.
- You can check out more detailed results of our analysis (including annual costs of each plan by scenario) in this Google spreadsheet.
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