Summer means lazy days spent at the beach, long nights with a cool beverage and in the electricity market, we look out for price spikes.
While buying power at wholesale prices is a cheaper way to get energy over the year, be aware that the wholesale market can be significantly more expensive for short periods of time.
A price spike occurs when the wholesale price climbs up to a maximum cap of ~$19 / kWh including GST, or up to ~$21 / kWh in SA. These occur for just a few hours each year, usually in January, and are typically caused by coal and gas power plants charging extremely high prices for energy when demand on the grid exceeds supply. For example, there is a higher likelihood of price spikes occurring in the early evening on very hot days, because this is when everyone gets home from work and runs their air conditioners. It’s also worth noting that price spikes are less common in NSW and QLD because these regions have more dispatchable supply. More on that later.
All energy companies pay this higher wholesale price for the power they sell to their customers during price spikes - but most of them simply charge you higher rates year-round to cover their costs on the assumption that you'll use heaps of expensive and dirty power during these times. This means that with most traditional energy companies, you can still end up paying for price spikes even if you reduce your usage when they happen.
Amber gives you a unique opportunity to completely avoid paying these higher prices - both year-round, and when price spikes happen.
As an Amber customer, price spikes present a big opportunity to potentially save (or earn!) up to $150 in just a few hours!
Why pay attention to price spikes?
By looking out for price spikes you can extract even more value from wholesale electricity rates. Take the typical usage for someone in VIC. Over a peak 3 hour period (Let’s say 5-8pm), they could be using up to 8 kWh of electricity by cranking large devices like air conditioners. In a worst case scenario, if they were to continue running their air conditioner and washing machine at the market price cap of $19 / kWh, then it would increase their bill in that month by ~$150.
Fortunately, at Amber, we’re committed to helping our customers get the cheapest possible power, and that means giving you the information you need to keep your bills down.
How we help: price spike alerts
In the morning at 9am, we check if there's any forecast price spikes above ~$3/kWh in the wholesale market that day. We'll then send through an email, push notification and text message, letting you know when a price spike is expected.
Check the notification settings on your app to ensure these are toggled on.
We've had a few false alarms previously, where our system has incorrectly predicted a price spike. During these situations, it's still a good idea to follow your price spike strategy because the price did climb, just not enough for there to be a spike. You can also keep an eye on the app throughout the day, because this will indicate when a price spike is forecast to occur.
On rare occasions, unexpected price spikes happen. For example, NSW was suddenly impacted during the bushfires in the Snowy Mountains, when key transmission lines shutdown.
In the event of an unexpected price spike, we'll send you an immediate alert.
Strategies for taking advantage of a price spike:
If you don’t have solar
You can save by limiting your energy use during a price spike, and there's lots of ways to do this. Here's some ideas:
- Pre-cool your house by running your air conditioner before the price spike and then turning off your air conditioner for a few hours during the price spike. This can save up to $126 over just 3 hours.
- Try to run power hungry devices like washing machines or dishwashers before or after a price spike. This will save you $14-$25 per device.
- You could even think about going out to dinner and a movie so you can turn everything off during a price spike. The savings might even pay for your meal and the movie ticket!
If you have solar / home battery
If you have solar then you have an opportunity to export power and earn up to $16/kWh! For example, we had one customer in South Australia who earned over $100 in just a few hours last January by exporting power from her solar panels during a price spike.
The best way for savvy solar customers to take advantage of this is to reduce their electricity usage as much as possible (i.e. by following the ideas above), maximising the amount of power they are exporting to the grid. You could go out and enjoy that dinner and movie ticket from the wholesale electricity market!
Historical occurrences of price spikes by state
The data below shows that in an entire year there are usually only 0 to 10 hours of notifiable price spikes. Last year in SA and VIC, there were 7 hours of significant price spikes, while in NSW and QLD, only half an hour of smaller price spikes were observed (above $3/kWh). As mentioned previously, price spikes in NSW and QLD are rare because of the extra dispatchable supply to meet demand in these markets. If you live in these regions, we still encourage you to keep an eye on your notifications just in case that changes. We’ll let you know if one is expected.
Is there a cap with Amber?
Yep. Over the course of a 12 month period we guarantee you will never pay more than the Government's Default Market Offer (the new reference price offered by traditional retailers) on average, or we'll refund the difference.
Price spikes are an opportunity to save money and help make the grid more reliable for everyone
The above strategies show why price spikes are a huge opportunity for Amber customers. While most customers will still save on their electricity with Amber, because wholesale prices are on-average much cheaper than retail rates, reducing your usage during these periods will help you save or earn even more. You'll also be helping improve the stability of the grid by reducing demand at peak times. The environmental benefits of this can't be understated, because reducing demand is a much better solution than building more fossil fuel-based power plants to limit the number of price spikes.
