Urth Energy offers solar households wholesale rates for power

Caitlin Fitzsimmons

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Solar panel owners fed up with dwindling payments for selling extra electricity back to the grid can now try their luck with the market.

Small electricity retailer Urth Energy has a new offer that pays households and small businesses for solar energy production based on the wholesale rates on the National Electricity Market.

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The use of solar storage systems is expected to explode in Australia and change the way households use their solar energy as generous tariffs expire.

The product, which is subject to a 15 per cent fee, is initially available in NSW, Queensland and South Australia.

The wholesale electricity price updates every five minutes based on supply.

At any given time this could be as high as $14 a kilowatt hour. Or it could be below zero – though Urth will wear the risk of negative prices.

Urth Energy director Richard Hermens said most electricity companies paid a flat 6¢-8¢ a kWh for small-scale solar and he believed this was low compared with the actual wholesale cost of power.

"With a 6¢ feed-in tariff, the retailer guarantees a minimum rate even when spot prices are low, but they also pocket the difference when spot prices are high," Hermens said.

"Urth Trader is a great option for an engaged grid-connected solar system owner who wants to take on this risk themselves and be an active player in the energy market."

The NSW Solar Bonus Scheme ends in December. Photo: Pat Scala

The product is likely to appeal to NSW solar panel owners affected by the closure of the state's Solar Bonus Scheme in December.

The scheme's closure means about 146,000 households and small businesses stand to lose their generous feed-in tariff rates of 60¢ a kWh. These customers are set to receive nothing for their solar unless they switch their meters from gross to net – a cost of about $500. Switching to Urth Trader would mean they could keep their gross meters.

However, another electricity company Powershop is offering free smart meters for existing and new customers affected by the closure of the Solar Bonus Scheme. Powershop pays 7.2¢ a kWh for solar fed back into the grid in NSW and Victoria, which is above average.

Urth will take the risk of negative prices and guarantee customers a floor price of zero. The exception is in South Australia where it will guarantee a minimum of 6.8¢ to comply with regulations.

South Australian customers will also have more opportunity to make money from Urth Trader because the wholesale prices are more volatile in that state.

This is nothing to do with this week's blackouts, which were caused by transmission lines being blown over in a severe storm.

Craig Nalder, the general manager of trading at Urth Energy, said the state's wholesale prices generally had more spikes and troughs because of the greater use of renewable energy (which has variable production) and natural gas (which has price fluctuations).

It was important to have diversified energy production but it wasn't necessary to revert to coal because battery technology was improving rapidly and the ability to store power would eventually smooth the volatility.

Volatile wholesale prices did not affect the retail prices paid by consumers, which were locked in for several years.

Nalder added the 15 per cent fee covered the cost of a trading team and other operational expenses and was not a source of profit.

"We are providing this service basically at cost," he said. "The interest for us is to build customers, and we make a margin on the energy we sell to customers."

Urth Energy was founded two years ago and is still relatively small. The company would not reveal customer numbers, but said it was "much smaller" than Powershop, which boasts 100,000 customers between Australia and New Zealand.

Nalder said Urth Energy's retail electricity prices were competitive, and could be compared at government website EnergyMadeEasy.gov.au.

The wholesale electricity prices can be viewed at the Australian Energy Market Operator's website, AEMO.com.au.

Hermens said people could monitor the prices and switch off devices to allow the power to flow into the grid – a practice known as "load shedding" – when prices were high.

Households using solar batteries could store surplus power and release it during price spikes.

But the fact that the price updates every five minutes and is so volatile might make it impractical for many households to monitor it too closely.