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UK - How I cut my Electric bill with Octopus Energy
#1
I know I’m likely preaching to the converted with many of you on these forums, but I want to let you all know how I have completely changed the way I power my house and how it has led to much reduced electricity bills and the power I’m using is much lower carbon content.
 
And it’s all thanks to Octopus Energy’s Agile (time of use) Tariffs
 
Wholesale price linked tariffs might sound risky in the same way buying shares can sound risky: “the value of your shares can go down as well as up” – This can strike fear into the money savvy saver. The same is true for variable mortgage rates. Most people prefer the stability of a known cost and no risk of nasty surprises.
And now there is a variable electricity tariff available from Octopus Energy. Some people will already have heard of it and others may have joined it already. I have and it is saving me a significant amount of money each month – Around £50 per month saving minimum.
 
Is it risky though?
 
Firstly, the variable rate is capped at 35p/kWh by Octopus Energy. I think just to reduce the risk for consumers if something catastrophic happened to the UK renewables generation capacity and we has to revert to all fossil fuels or something. 35p seems high, and it is, but I have been on the agile tariff for 6 months now and the highest I have ever seen is 30p and it was for just an hour.
 
Second, it is really quite predictable. Below is a sample graph of prices for a few random days. They all follow pretty much the same pattern and prices. Typical high peak prices are low 20's and typical off peak are sub 10.

 
Third, as wholesale prices go up and down throughout the day, weeks, months, these variances are most certainly taken into account by the suppliers of fixed rate tariffs. They are going to need some degree of ‘contingency’ aka, fat, built into the price you pay. Linking a tariff to the wholesale price actually reduces the risk for the supplier and will consequently save you money.
 
Octopus Energy have a simple formula for working out the cost. It’s worth looking at how it works because it shows how they will make money even while you are saving money.
 
Straight from their website:
 
The unit rate charge (in pence per kilowatt-hour) for a given half-hour period is:
 
min(2.10 x W + P, 33.33)
where:
 
2.10 is a coefficient that includes our distribution costs;
W is the wholesale cost of electricity for that period (in pence per kilowatt-hour);
P has value 13.00 between 4pm and 7pm but is zero otherwise.
33.33 is chosen to ensure the price is capped at 35p/kWh once VAT is added.
 
So you can see that they are marking up by more than double, and during peak times, adding an additional 13p for good measure. This tariff is clearly designed to reduce peak demand either by changing usage patterns or by implementing devices that can reduce the grid usage at peak times.
 
How would we achieve that though?
 
Usage change
 
Looking at that formula, it is clear to see that peak time is 4pm until 7pm. Dinner time sites squarely in there. You are going to use the oven, or kettle, or microwave etc. What you don’t need though is the washing machine, tumble dryer, dishwasher or the dreaded electric shower. Moving those non-essential energy consuming activities to off peak will likely be sufficient for you to see some real savings on your bill.
 
Installing some form of localized power generation or storage can further improve cost reductions though. Lets look briefly at all the installation options:
 
Solar only
 
Fixed rate electricity price (18p/kWh)
I have solar installed on my house and that does help reduce the consumption a bit, but that power is produced at my house when the sun is shining and generally, nobody is home at that time. So the power is exported to the grid and on a fixed rate FiT or SEG you’ll get around 5p/kWh and when you get home from work you buy power at 18p/kWh from the grid. So you save 5/18=27% of your power bill on the amount of power you generate. Its ok, but it’s not great is it?
 
Variable Rate electricity price (-4p/kWh to 30p/kWh)
Power generated during the day is sold to the grid for 5p/kWh. You get home at, say, 6pm, the solar isn’t making much, and electricity is now expensive to buy until 7pm. Typically, you will be paying 20-25p/kwh for that hour. After 7pm, the price drops significantly, but will likely stay over 5p/kWh until 11pm. Lets say an average of 8p/kWh. That’s fairly typical of what I see. So for 1 hour, the savings the solar generated will be 5/25=20% and after that it is 5/8=62%. Clearly a big difference.
And this is where your usage pattern will play a big part. Avoid using power between 4pm-7pm and you will save more money.
 
Battery only
With no solar to charge the battery you will at a minimum set timers to charge up the battery when electricity prices are lowest. During Winter this has been roughly between midnight and 5am. In summer it is the same times at night but also during the day when renewables input to the grid are high. It is typical for prices to drop as low as 3p, but normally you have a good 6 hours at sub 5p/kWh. Enough to charge the battery. Then at 4pm you have a full battery which can be used in a few different ways depending on your setup.
If you do not have an MCS approved system, you will not have permission to export power. In this case I would recommend a grid tie inverter that has current sensing and current limiting feature. This will allow you to self consume from the battery without exporting.
If you can export, which is what I do, then I generally discharge the battery at a rate that depletes the battery in exactly 3 hours. Its somewhat hard to get that right, so normally I go a little over 7pm, but generally works out great.
This will mean that your usage at peak time is low. Often very low. Mine is often negative. If you are on the Octopus Agile Export Tariff, then negative usage between 4pm – 7pm is great as you get paid more for power exported than you pay after peak is over. This is the holy grail for me and I’ll come back to that in a bit.
So with low peak usage, your energy is mainly made up of off-peak consumption and this averages around 7-10p/kWh. Fantastically cheap compares to even the best fixed rate tariffs.
 
 
Solar and Battery
 
This is what I have.
The combination of the battery and solar gives the greatest flexibility over when to use power. This is especially true if you are at home during the day. I find that in the Summer, solar has charged the battery by lunchtime and all excess power gets exported unless I am home to use it. As the rate I am paid for this export is generally off peak, I am paid very little for it. Consequently, it leads me to forever desiring bigger battery capacity and that is a slippery slope!
So for me, the ideal target size of battery is how much you could charge by 4pm.
Regardless, the solar charges the battery during the day during off peak. Power at this time is somewhere around 5p-7p typically, so at the very best, this is what the solar is saving you.  In addition to that modest saving, the solar can contribute to your homes demands between 4pm and 7pm during the sunnier half of the year. I have installed 3kw west facing Panels on my two story house roof. Initially, I thought this was less than perfect as everyone knows that in the northern hemisphere, we want south facing panels. Right? Well it turns out that West facing panels are making a good amount of power into the evenings and for more than half the year is providing my home with a few kW right through the Agile tariff peak times. Perfect!  
So with panels and battery, I could typically export, on a sunny day, 3kw for 3 hours between 4pm and 7pm. That’s 9kwh for those 3 hours and on the agile export tariff, that’s about 10p-11p per kWh paid for that. So 90p paid.  My off peak grid usage on that same typical day would be about 10kwh max and the rates for that would average around 6p, so 60p worth. So At the end of that sunny day, I end up with a negative bill for the day.
 
My results
 
Obviously, solar is weather dependent and this is the UK, however, I have so far this year had about 20 days where I made more money than I spent.
My total electric bill for April was just £14. I find that incredible.
During winter where solar generation was essentially negligible, My monthly bill was around £45.
Before I joined this tariff I was paying around double that.
 
My electricity price is so low now, I am seriously considering going all out electric and disconnecting the gas. Just the gas standing charge alone would buy me a good 4 or 5 kWh of heating per day. Gas costs around 3p/kWh. This tariff could compete with that.
 
I have not covered water heating as mine is heated by gas only due to a failed and very seized immersion heater. The tank will get replaced one day, so I will do the whole solar iBoost thing, but not planned for the near term.
 
Other interesting things about Octopus
 
The Octopus Energy bills are quite something. On the agile tariffs, you get one page of bill per day and it shows the half hourly rate and consumption line by line. It then calculates the average rate for that day. You get the same on the agile export. So the monthly bills are in excess of 60 pages! I do love a bit of data analysis, so I find these bills quite interesting to read.
 
Regarding data analysis – Octopus offer an API, which for the uninitiated, is an interface to access the tariff data and your usage data as raw data which can be pulled into a wealth of different platforms. I have not played with this yet, but it can integrate into IFTTT (IF This Then That), so you can set smart plugs etc to come on if the electricity price drops below a certain point for example. Again, potentially more savings to be made with home automation.
 
It is also really exciting when you get a chunk of time where you electricity price become negative. You will literally be paid to use power. This happens when demand is low and renewables are abundant. This is a first in the UK and made the news: https://www.theguardian.com/environment/...g-lockdown
 
Conclusion
 
I am extremely excited about this new way of buying and selling electricity and I want to congratulate Octopus for doing the hard work in setting it up.
 
If this all sounds interesting to you, then investing in the cheapest MCS approved install will open more opportunities to use the variable export rates to your advantage, but even without that, just by utilizing a current limiting inverter and a battery and by reducing your peak time usage you can cut your electricity bill by over 50%.
 
I feel there is so much flexibility with a tariff like this that many people will be surprised at the savings to be made.
 
If you are interested in trying it out, please consider using my referral code https://share.octopus.energy/calm-bloom-591 for £50 off and remember to let me know how well it is working for you. I would take great pleasure in hearing of your own story.
hermitdave likes this post
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#2
EV charging with a "Ohme intelligent wall charger" would be a superb addition to this. It downloads the half-hourly rates for Octopus and intelligently schedules the EV charging times to minimize cost and/or carbon footprint. Not sure how well it would work with solar power.
Hope this sort of thing becomes available in my country.

"Electric Vehicle Man" has a nice video on this:
https://www.youtube.com/watch?v=-mhEtIm3GmU
Daveyboy likes this post
Modular PowerShelf using 3D printed packs.  60kWh and growing.
https://secondlifestorage.com/showthread.php?tid=6458
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#3
Any UK people read this? Or are you all on Octopus already and I was indeed preaching to the converted? Big Grin
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#4
I had a detailed look an analysis of the half hourly tarrif and worked out that it is great for summer (if you dont have enough solar) but the main issue for me was that the peak pricing in winter was a big enough margin difference that it outweighed the remainder of the year in my case.. The peak pricing in winter will become progressively worse because of the way the system is being balanced and the peak price is not just energy as it is also laden with system stability costs for balancing purposes. Summer will however progressively get cheaper and cheaper, but that's not that helpful for home solar installs. Last weekends negative pricing is an early example of what is to come.

1kWh of Peak power at 35p/kWh means an extra 20p saving is required elsewhere (15p/kWh regular tariff). Not enough solar in the winter means you don't need many kWh at the peak to make it difficult to balance out the cost. If your normal saving is only 7p/kWh (taking into account true cost of battery and solar) then for every hour at peak you need 3 solar kWh to offset the cost.

If you can move enough load around in winter then it can work quite well OR have a large enough inverter output to cancel any peak demand out (with overnight battery top-up). This is a problem as you can't add above 3.8kW without a lot of hoops (paperwork) and additional costs (additional certified installer, grid study, additional inverters, etc.). The marginal benefit of chasing peak capacity is not worth it as the costs increase more and more (per kW) for less and less energy output (kWh).. i.e Cost per kW / Cost per kWh out.

All that said, I do like the tariff but the economics can bite you in the as.... if not careful. With an EV it is a winner though if you hunt (forward guess) for the minimum pricing periods in the 24-48 hours ahead...

I had also looked at the half hourly tariff to sell back against, however this was again not enough of a margin to make it viable for me exporting any battery power yet... Even looking at buying to charge and selling to discharge, the margin was just too small when taking into acount additional wear an tear costs and risk of scheduling.. That was on pricing upto about April 2019 for the previous 2 years.

"risk of scheduling" - i.e. using you appliances when you think your system is balancing whe it has failed for some random reason or not charging.

Might need to have another look soon...

min(2.10 x W + P, 33.33)

Form my old days working at a utility calculating supply tariffs for domestic, commercial and industrial sites, that formula could give a supplier quite a nice large margin..... If they removed P and increased 2.1 to say 2.5 then it could be more attractive...
If you can't quantify how much they cost, it's a deal, I'll buy 5 of them for 3 lumps of rocking horse ......
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#5
Nice one David.

I had a specialised meter for a decade - 2100 to 700 weekdays and entire weekend off peak rate. 700 to 2100 peak rate.
We got used to moving things out of the way not it was always difficult for my wife as she don’t have time for this crap ?

My last years rate was 17p / 8p per kWh
Any ways after trying and failing to get on OVO Energy’s V2G trial, I signed up to Agile. Of course COVID lockdown also happened so that remains to be seen.

I consciously knew that price might be more but 21 off peak hours means I can convince my wife to keep eye on non essential utilisation between 1600 to 1900.

What though I love about agile is 0 or negative pricing on odd days.
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#6
Forgot about Gas.. their gas prices are cheaper and they have a great gas tracker tariff. Last I checked I was pressing 1.66p / kWh

Another good thing about Octopus is that you can contact them but email / Twitter and changes happen overnight.
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