Made possible by an Energy Market Ready Grant from the Victorian Government (Department of Energy, Environment and Climate Action)

Register your interest in the “Renewable Ready Tariff”. It’s free for a limited time. 

Summary

Electricity Tariff Types might sound obscure, but it could be the key to unlocking big savings for you and supporting the renewable transition.

Did you know, that most people are not using their best electricity tariff type and can switch? The old fashioned single rate tariff no longer suits most customers and holds back the renewable transition. Time of use tariffs have also changed radically, and are now much easier to use. Get tariff analysis done now and find out if you can benefit from switching.

Read on to find out about the three main types of electricity tariff and how you could benefit from getting the best one for your usage pattern and capitalise on the availability of renewable energy whether you have your own solar or not.

What are Electricity Tariffs?

There are 4 main types of electricity tariff.

The most simple and most common tariff type is often called Anytime or Single Rate, because all energy is charged at the same rate irrespective of when the energy is consumed. Around 75% of homes and small businesses in Australia have this price structure.

Time of Use tariffs have 2 (or sometimes 3) time periods. Energy consumed in each of these periods is charged at different rates.

In addition to energy charges, Demand tariffs have a separate charge for the maximum energy use in a half hour period during a month. These tariffs have mainly applied to larger business customers till recently but are now available for home customers too.

Controlled load tariffs are used for some appliances – like electric hot water systems or underfloor heating and run in off-peak times.

What makes Electricity Tariffs Renewable Ready?

Renewable energy is often in surplus during the day when the sun is shining and overnight when the wind is blowing and demand is low.  The supply system is under more stress in the late afternoon and evening because demand is high and renewable energy is less able to meet it.

Typical Time of Use tariffs for homes have peak rates from 3 pm to 9 pm with off peak rates at all other times. The aim of these tariffs is to encourage usage outside the evening peak times. Some suppliers have novel offers where electricity is free from noon till 2 pm, a so called ‘free lunch’. Some provders use daylight saving time while others use standard time and this can make a difference.

Demand tariffs have a similar aim but are more focussed on giving customers an incentive to reduce their maximum call on the distribution and transmission systems.

Anytime or single rate tariffs are not renewable ready because the customer has no incentive to align any of their usage with the availability of renewable energy.

How can I benefit from Modern Electricity Tariff Types?

We estimate that more than half of customers are not using their best tariff option. Our clever tariff analysis tool can check for you, and it’s free for the trial period.
How could I benefit?

  1. If you would pay less under a different tariff type given your current usage pattern, and
  2. In the future, by making minor changes to usage patterns, e.g. running your dishwasher in the morning or just before going to bed, you could save even more.

The Energy Market Ready Grant is supporting us to do tariff analysis for you and help you switch tariff. Just in one area we counted 30 different pricing combinations, so let us navigate it for you.

Already have a time of use tariff? Don’t worry, we’ll check if it’s the best choice for you.

Can Switching to “Renewable Ready Tariffs” support the transition?

Renewable ready tariffs give an incentive to reduce the peak demand on the network and generation, while increasing utilisation in off peak times when renewable energy is plentiful.

I estimate that switching to the time of use tariff across homes in the National Electricity Market could reduce maximum demand by around 2240 MW OR equal to the impact of Snowy 2 on the wholesale market, which coincidentally also has a maximum capacity of 2200 MW. This is based on a price elasticity of 0.5.

There is more. There is a similar impact in reducing the need for investment in distribution and transmission. At $2M/MW, there is an additional saving of $4.4B which translates into lower network charges for everyone, not just those who transfer to the new tariffs.

Even if only adopted by say 60% of customers that could benefit immediately, demand reduction would be around 1340 MW. Extension of this pricing to business could at least double this impact.

The cost of Snowy 2 is currently estimated at $17B. Customers will pay for the grid upgrade (currently $5B) and pay Snowy Hydro for it’s capacity services. So expect to pay for Snowy 2 in your bills.

By contrast, the cost of implementing renewable ready tariffs is close to zero, and the impact of lowering maximum demand by 2200 MW would lower the cost to home customers by around 15% with reductions also accruing to customers not adopting the new tariffs.

Why should I participate?

It’s simple and free to get tariff analysis if you act now. Find out if you can save now by switching tariffs. If you can, there’s a good chance you can save more by making minor changes in how you use electricity.

Renewable ready tariffs can help you save now, but you can save even more in the future on for example switching from gas to electric hot water and charging your electric vehicle.

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