Urth Energy announces solar feed-in tariff based on wholesale spot market price

Electricity retailer Urth Energy has announced a retail electricity plan that allows solar system owners to sell their surplus solar energy at wholesale rates on the National Electricity Market (NEM). The Urth Trader plan is unlike anything else available in Australia in that the feed-in rates will fluctuate every half hour, allowing customers to take advantage of spot price spikes when they occur. Urth Trader is available to customers in South Australia, NSW and the Energex network in Queensland.

Update 6 Feb 2017 – Urth Energy has gone into administration and no longer services customers. We nevertheless hope that another retailer will introduce a spot market-based feed-in tariff.

With most electricity retailers, solar feed in rates are usually fixed over contract periods and currently sit at about 6-8c/kWh – a fraction of what homes usually pay for electricity through their retailers. These rates are essentially a smoothed out version of the NEM’s fluctuating spot prices. While Urth Trader does not promise a higher average overall feed-in benefit compared to a 6c/kWh rate, it does allow customers unprecedented access to the wholesale market, where prices can go as high as $14/kWh (although such events are relatively rare).

As we’ve noted before, looking for the highest solar feed-in tariff rate will not necessarily deliver the highest savings for a solar home, as each retail electricity plan comes with several variables. For instance, a plan with a high feed-in tariff rate may also have higher fixed, daily supply charges or higher c/kWh usage rates – which could easily offset the benefits of a higher feed-in tariff. Make sure you compare plans carefully (our Solar-Friendly Retail Electricity Plan Comparison Tool can help).

Benefits of Urth Trader

Urth Energy says that the two primary benefits of the Urth Trader plan are:

  • Transparency – Instead of a flat c/kWh rate for your exported solar energy, you will receive the amount that your solar is officially ‘worth’ on the spot market (minus a 15% admin fee). If spot prices are high over a given period, you reap the benefits. If spot prices are low, then your returns may be smaller.
  • Control – Until now, exported solar energy was worth the same amount of money to a solar household regardless of when it was sent into the grid. With Urth Trader, it is now possible for a solar home to choose to export energy when spot prices are high or use it themselves when the spot price is low. (N.b. You must have an interval meter as opposed to an accumulation meter in order to benefit in this way). In doing so, the Trader plan unlocks a new stream of potential value for solar households.

The video below explains how the Urth Trader feed-in tariff works:

Who is Urth Trader for?

Urth Energy recommends the Urth Trader plan for three groups of people:

  • Highly engaged energy consumers – Urth Trader is an excellent plan for people who are highly engaged in their energy usage, and opens up a world of opportunities for battery storage system owners, who may be able to time the export of their stored energy proactively to maximise value and returns.
  • Solar system owners who want clear, transparent rates for their solar – Urth Trader offers the only feed-in tariff rate in Australia for small-scale solar systems that is based on the wholesale spot price. This means that the value of a home’s exported solar is tied to an objective, external source that anyone can reference.
  • NSW Solar Bonus Scheme recipients – Urth says that their Trader package could be a good interim option for NSW homes who are going to lose their Solar Bonus Scheme benefits at the end of this year, but who do not want to swap out their gross electricity meter for a net meter. Our view at Solar Choice is that changing over to a net meter should be a home’s first option where practicable and affordable, as doing so would allow them to save more money through solar self-consumption / offsetting.

Maximising value from the Urth Trader plan

Urth Energy notes that for most homes on Urth Trader, solar self-consumption will still be the primary way to save money. They also paint a ‘best case scenario’ of what access to the wholesale electricity spot market could mean for the right homes:

In the world of affordable and commonplace solar systems, it is more cost-effective to use solar energy at the site where it is generated (as opposed to exporting to the grid). Imagine, for example, a solar system owner who keeps regular tabs on their energy production and consumption patterns through an energy management system and/or monitoring app in order to maximise their energy’s value. This person would be able to take action by turning off appliances in their home to export solar and take advantage of high wholesale rates when they occur… A supremely sophisticated energy management system might be able to do this automatically in the future.

A sign of Australia’s increasingly decentralised grid

The statement above hints at the much larger implications of how Urth Trader promises to change the relationship between the solar homes and their retailer. “Small-scale, distributed energy systems are a relatively new concept, and their broad adoption has resulted in both conflicts and opportunities as the status quo is slowly but surely reconfigured,” says Urth Energy. “The essence of this shift is that households and businesses are no longer simple energy consumers, they are also producers.” Urth Energy is the first retailer in Australia to give their solar customers the option to be treated as bona fide power generators in their own right.

© 2016 Solar Choice Pty Ltd

Jeff Sykes