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 ~$16.50 / kWh including GST (56 times normal prices - depending on your region). These occur for just a few hours each year, usually in January, and typically caused by demand exceeding 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.
As an Amber customer, price spikes present a big opportunity to potentially save (or earn!) up to $165 in just a few hours!
By looking out for price spikes you can extract even more value from wholesale electricity rates. Take the typical usage for someone in SA. Over a peak 3 hour period (Let’s say 5-8pm), they could be using up to 10 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 $16.50 / kWh, then it would increase their bill in that month by $165.
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.
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 (and from January a push notification or a text message), letting you know when a price spike is expected. 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 price 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.
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 to help you:
If you have solar panels you have an opportunity to earn big bucks by exporting power and earning up to $16.50/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. Enjoy that dinner and movie ticket from the wholesale electricity market!
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.
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). In a worst case scenario, where you use a lot more power during price spikes and end up with a higher annual bill than the DMO, we'll refund the difference. So with Amber you have all the upside of saving money by buying power at wholesale prices, with protection against the downside risk of bill shock.
The above strategies show why paying attention to price spikes is 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 to improve the stability of the grid by reducing demand at peak times, which should give you a warm fuzzy feeling. The benefits to the environment are significant, because reducing demand is much better than building more fossil fuel-based power plants to limit the number of price spikes.