Wait – what the heck is tariff arbitrage?
The general definition of “arbitrage” is:
… the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
Clear as mud, hmm? That’s because the definition above relates to financial terms, and those financey guys are wizards of obfuscation.
Enough with the big words though. This is about finance, but not in the way Mr Stock Trading Person above understands it.
The practice of tariff arbitrage for electricity has a much more detailed explanation, but for me it breaks down to this:
Charge my battery when it is cheap, to use when it is not.
“Hang on – you have solar panels! Why do you need the arbithingees?”
I’m glad you asked, random internet person.
Tariff Arbitrage In Practice
Tariff arbitrage needs a set of circumstances to be useful.
Firstly, a battery to store the power. Solar is awesome, but it has issues with needing the sun. That generally means daytime, and not raining.
Secondly, you need the right electricity plan. When I was on single-rate electricity, I’d pay about 23c / kWh around the clock. Now I’m on TOU (Time Of Use), I pay off-peak of around 13c / kWh, and peak of around 33c / kWh.
Third, you need something smart to control all this, like Reposit Power. My Reposit box governs power flows between Solar PV, battery, and grid.
It has a learning engine for my household habits, so it knows when I’ll use power. Additionally, it can look at weather forecasts to see when I’ll have solar energy available.
These are two important things to know, because when I’ll use power and when the sun is shining are going to make a difference for my power bill. Particularly as I pay different rates for power when I use it.
A Graphic Example
Here is a screenshot of the (new) Reposit interface for my battery from this morning. I’ve edited the image to have two labels on it to show the power consumption.
Fairly typical for the household while we’re asleep. The Powerwall slowly draining as it feeds the fridge, any standby devices, and bathroom light for the kids. Only thing that changes is how much is in the battery to start with.
Here is the same screen but with data from the day before.
Yowzah! It is going UP! And there is a reason for that: tariff arbitrage.
Yesterday, the forecast for Sydney was rain and heavily overcast conditions.
The Reposit software decided, based on the weather and my needs, that it should top up the battery to get me through the day. It uses the off-peak period to do that, and had actually commenced importing at 10PM the previous night.
This is the first time I’ve seen it top the battery right up. As you can see from the rest of the graph, I didn’t get through all this power in peak time. But I was buying it at a much lower cost than I’d otherwise pay.
Here are the current rates I’m paying for Diamond Energy on TOU:
30.53 (0-340kWh per month),
31.49 (balance of kWh)
7am – 1pm,
8pm – 10pm weekdays,
7am – 10pm weekends / public holidays
All other times
Reposit Power aims to lower my costs. This decision to top up the battery is primarily for the peak period of 1-8PM where costs are at a premium. Once you take transmission loss into account (92% round trip efficiency on the Powerwall) I’m still ahead against Peak power cost by a ratio of 2:1.
Everything in between will mostly be taken care of by the trickle of Solar PV I generated during the day, as evidenced by the chart below.
This figure of 10.8kWh for the day is a long way from the 40kWh I’ve registered twice so far in October. But every bit counts.
Smoothing the Curve
Thinking about the solar figure jumping around a little, it also brings to light the other aspect of battery usage: curve smoothing.
When we have days with scudding* cloud and intermittent sunshine, a solar PV house with no battery is forced to call on the grid multiple times.
* Totally a word. Look it up.
Once the battery gets some juice in it, I’m less reliant on the grid for a sudden change in conditions.
Combine this with the automation of Reposit Power – where I don’t need to think about when the sun is out or not – and I’m onto a winner!