By Mike Foley
Some people play the stock market to try to get ahead. Others have decided to play the electricity market, backing themselves to cut expensive power bills by working out the cheapest time to flick a switch.
But to get it right, households have to watch fluctuations like a hawk, or they could end up paying more.
Andre Obradovic, from Eltham, Melbourne, moved six years ago to a relatively new energy market player, Amber Electric, which gives subscribers access to wholesale electricity prices rather than a retail price.
Andre Obradovic says his power bills are significantly cheaper since he linked them to the wholesale spot market through Amber. Credit: Jason South
Obradovic uses the Amber app, which alerts him to fluctuations in the wholesale spot price, to run energy-hungry appliances when renewables are powering the grid and prices are low.
“Every morning we get a text from Amber that tells me if energy is cheap now, or it tells me there’s going to be a price spike in half an hour or so. We can plan how to use our energy during the day,” he says.
Obradovic estimates the average monthly bill for his family, which has rooftop solar panels but no household battery or electric vehicle, is now around $210, a saving of around 25 per cent a year compared to his previous retailer.
“Some months, my energy bill is more than I would expect. But the upside of that is in summer and spring, they’re really, really low. You need to look at it from a long-term perspective over the year,” he says.
Traditional retail companies pay in advance for future supply of wholesale electricity and sell it to their customers with a mark-up. Retail prices are regulated by governments, which set an annual price cap.
Amber, which was founded in 2017, instead charges a monthly subscription fee of $22, or $264 a year. It installs smart meters on the homes of customers, who then use its app to see the wholesale spot price and plan their electricity use around cheaper times.
Tim Maguire from Sydney’s northern beaches is heavily invested in clean energy technology and helps run a local group advising others considering household solar and batteries.
With a large rooftop solar installation at his home and three batteries, Maguire is keen to play his part in the clean energy transition by exporting some of the power he generates back into the grid.
After signing on with Amber, he says he no longer pays for electricity use and can make up to $300 in a night. Maguire says his most recent battery, which cost $11,500, will pay for itself in 5½ years.
But energy experts warn of the risk of bill shock if customers don’t monitor the wholesale market, are caught out by a wholesale price spike or forget to turn off their air conditioner during peak times.
The wholesale price fluctuates constantly. It is generally cheaper in the middle of the day when renewables are plentiful and more expensive from the early evening when power from coal and gas plants kicks in, and can vary from season to season as demand for heating or cooling changes.
Variables that affect supply – such as an unusual lack of wind, a mechanical failure at a coal plant or a high gas price that discourages plant owners from firing up their turbines – also come into play.
Even Amber admits wholesale pricing isn’t for everyone.
Amber co-founder Chris Thompson says the company was created to capitalise on the opportunity to give customers more control over power prices, but he concedes “it’s certainly a more engaged product than a traditional retail offering”.
“If you’re on a fixed income and rely on stable and predictable electricity bills every month, then a traditional flat-rate plan might be better for you,” the company’s website says.
Amber does offer a bill guarantee, which caps what it can charge customers per quarter at a rate marginally above the default retail offer.
But St Vincent de Paul general manager of policy and research Gavin Dufty advises households to be wary of variable spot prices and says anyone thinking of signing up with a company like Amber should ensure they had the time to monitor market fluctuations.
“The wholesale market at the moment is incredibly volatile. It offers savings, but equally it offers risk as well,” Dufty says.
“We don’t know when there’s going to be a wind drought; we don’t know when the sun is going to disappear.
“You need to be highly engaged and you need to know when to pull the pin and when to stay.”
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.