Some thoughts on selling electricity back to the grid

by @edent | , | 7 comments | Read ~282 times.

I have solar panels! The UK mandates that my electricity supplier buys the surplus energy off me. They set a minimum price, known as the SEG (Smart Export Guarantee).

My supplier - Bulb - pay me 5.38p for every kWh I export. I pay them about 13p for every kWh I import.

You notice the discrepancy? When I tweeted about this, some people got angry on my behalf. How could I stand being ripped off like this? Why couldn't I sell electricity to my neighbours at full price?

Personally, I'm quite happy with the deal. I sell the electricity at "wholesale" prices - and Bulb resell it at "retail" prices. I'm down 8p/kWh - but look at what I get in return:

  • Single point of contact. I don't have to negotiate with each of my neighbours.
  • Predictable prices. If another neighbour gets panels, will I have to lower my prices?
  • Reduced cost. How expensive is it to buy a monitoring device, or segregate my electrical network?
  • Lower chance of default. Is a large energy company more credit-worthy than a local community?
  • A regulated environment. What if a neighbour disputes how much energy I've supplied?

Basically, this is the calculation that every seller makes. Trade risk for lower returns.

Would it be lovely if I could sell my organic, small batch, locally-sourced electricity directly to my neighbourhood? Sure! But the reality of me having to set up agreements with multiple parties makes it impractical.

7 thoughts on “Some thoughts on selling electricity back to the grid

  1. Rob says:

    NPR’s Planet Monet podcast did an interesting episode on the origins of feed in tariffs in January: https://www.npr.org/transcripts/797322305

  2. Sam Machin says:

    The other major thing you pay for here is The Grid, a system that transmits electricity from where its currently produced to where its currently needed, and keeps everything in balance is very valuable and not cheap to build or maintain. Grids work best when they're larger and more diverse allowing a balance of supply and demand, Your solar production and your usage will be pretty similar patterns to your local neighbors so without large capacity local storage a 'local grid' isn't practical. Clouds move over localized spots so with PV the grid helps to balance out the effect of a cloud shadow moving over a city, your output will peak and trough but it will be out of sync with one a mile down the road or so. Multiply this by the whole country and that`s the value in the grid.

  3. If I sell anything to a retailer, as an individual, and in small quantities, I get less than the retailer sells it for. This applies not just to electricity, but to second hand books, cars, antiques, works of art, or body parts. Welcome to capitalism!

  4. mike says:

    How to sell your organic, small batch, locally-sourced electricity directly to your neighbourhood without having to set up agreements with multiple parties: Buy a load of powerbanks. Poundland sell low capacity ones, ideal for small batch distribution. Charge them up when it's sunny. Add nice packaging made of 100% ethically source recycled materials and featuring blurb about eco friendly organic small batch artisanalness to taste. Sell them to your neighbours. People can bring them back for re-filling, for a price less than the initial purchase cost obviously, which adds an eco-friendly re-use element to the Eden Electric enterprise.

  5. Helen Gavin says:

    Peer to peer energy trading in the UK is not yet possible. This is because it is not possible for consumers to have more than one contact with an electricity supplier.
    There are trials going on to work out how systems could operate and diffident business models etc but fundamentally regulations need to change before it can be rolled out.
    More info if you're interested: https://www.solar-trade.org.uk/trading-sunlight-prospects-for-peer-to-peer-energy-trading/

  6. Neil Brown says:

    A very sensible post: as a small wholesaler, with minimal cost versus the significant cost of being a licensed energy supplier, it’s no surprise that the amount @edent is paid by his supplier is less than the amount he has to pay to consume energy from his supplier.

  7. Nice explanation Terence! In the Netherlands we can use the grid as a battery for the surplus. What we deliver is deducted from our usage in the winter. The rest earns us roughly €0,11/kwh This will stay that way until at least 2022

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