At Octopus, we create sensible power tariffs like AgileOctopus with pricing that varies all through the day based mostly on the present wholesale market value of power. Nevertheless it’s rather more than an affordable tariff: it’s an experiment, a key a part of our mission to drive the transition to a 100% renewable power system.
AgileOctopus costs are calculated robotically within the night based mostly on the following day’s wholesale value forecast (learn our Agile pricing method right here). Tonnes of various components from the climate, to politics, to large world crises like COVID-19 and the conflict in Ukraine, can have an effect on the wholesale value of power.
The place most typical power tariffs are hedged months upfront so clients solely really feel the results of actually long-term wholesale modifications, Agile’s dynamic pricing means short-term market modifications could make a giant distinction.
On this weblog, our power procurement group will give the news available on the market circumstances which have led to explicit modifications in our Agile tariff’s charges.
Skip to up-to-date details about market circumstances affecting Agile costs
Replace January 2023: Within the ongoing power disaster, wholesale costs are round 4x regular ranges and risky. You’ll be able to learn extra about what is going on on right here.
At current, Agile costs are on the 35p / kWh cap more often than not – roughly 1p / kWh costlier that the present Vitality Value Assure charges.
However first, a fast notice on why we create merchandise like AgileOctopus.
Whereas it’s wonderful to have the ability to cross low cost costs on to clients, that’s not why we’ve created our sensible tariffs. Agile is an experiment designed to rework the best way our society makes use of power – and a key a part of that entails value ‘peaks’ in addition to plunges.
Our plan with a tariff like Agile is to make utilizing power cheaper when it’s greener, and costlier when it’s soiled, within the hopes of serving to individuals change their power use accordingly – decreasing the necessity for fossil fuels, and profiting from renewable power at occasions when the wind is blowing and the solar is shining.
Meaning AgileOctopus has each tremendous low (generally unfavorable) value durations when power could be very inexperienced, AND on the flip aspect, additionally some fairly dear peak durations (beforehand capped at 35p / kWh, however now 100p / kWh as of Oct 2022) when the system is below a number of strain and so extra carbon intensive.
When costs are larger, AgileOctopus isn’t damaged – it is working precisely because it ought to. Very like when the prepare station gates shut throughout rush hour, Agile’s larger value durations sign to clients when they need to keep away from utilizing energy then as a lot as doable to save lots of money and carbon, and keep away from straining the grid.
As a buyer on this modern tariff, you must take the ‘highs’ with the ‘lows’. We noticed unimaginable, sustained low costs all through the UK lockdown, when tremendous sunny and windy days mixed with unprecedented low power demand to result in a ‘excellent storm’ for energy costs. On a number of events, Agile clients have been paid to make use of power.
Extra lately, we’ve seen some larger priced days as wind technology has dropped, the worth of gasoline has risen, and ‘heatwave’ temperatures have seen demand for power – and subsequently, wholesale power costs – creeping up a bit world wide. Crucial factor to recollect is that the circumstances driving larger costs are part of the identical wholesale dynamics that have an effect on all power prices – they simply present up very straight in Agile. In the long term – all power tariffs mirror power value will increase in any other case corporations would go bust.
Will I lower your expenses on AgileOctopus?
AgileOctopus has, to make use of Greg’s favorite expression, bonkers low cost power. Even in current months when the costs go ‘excessive’, the typical day by day value on agile octopus is often considerably cheaper than a normal tariff.
In the long term, whether or not you save will largely rely rather a lot on how a lot you alter your power use.
In case you use power precisely as regular, you’ll doubtless find yourself paying across the similar as a normal mounted tariffs, as a result of the costly costs through the day by day night peaks are balanced out by ~21 hours of cheaper ‘off-peak’ power on daily basis. In case you shift your utilization out of the height occasions, you might stand to save cash.
Throughout the final 12 months (April 2020-2021), almost all Agile clients nonetheless acquired cheaper power than our common mounted value – even through the ‘costliest’ durations of time:
Balanced out with the months of cheaper costs in lockdown one, usually clients are nonetheless saving tons throughout an entire 12 months. This clearly exhibits that Agile is all about what you do with it. even if you happen to do not shift a lot of your power use in any respect, you may doubtless nonetheless save a bit, or break even. Nut individuals can attain super-cheap costs by shifting their power load as a lot as doable, utilizing up extra inexperienced electrons and utilizing much less energy when there’s a great deal of fossil fuels within the system.
So, what’s occurring with wholesale costs?
27/09/21
Because the climate will get colder, we’re all beginning to suppose extra about our heating. It has been windier, however we would count on that this time of 12 months and there was a lull within the wind earlier within the week which brought on a drop in anticipated wind technology. France additionally has some nuclear and hydro down in the meanwhile – and consequently extra energy than anticipated is being exported to the continent.
Will Agile costs drop? We hope so. We’re nonetheless within the midst of an power disaster pushed by Russian gasoline provide constraints and there isn’t a number of agency capability that we are able to activate when the wind isn’t blowing that doesn’t depend on burning costly fossil fuels, and carbon costs have been hitting new highs for the final 3 months. This stuff will change, however in the meanwhile the worth of power could be very costly. We don’t set Agile costs, they mirror the day forward wholesale value for energy, so it’s significantly delicate to modifications within the underlying value of energy. In the intervening time that signifies that it has grow to be costly, however it’ll additionally come down rapidly as quickly as wholesale falls.
06/09/2021
Low gasoline provide, much less wind, and excessive carbon credit score costs push electrical energy costs to an all time excessive:
So what is going on on? Effectively, persevering with on from our final submit, gasoline remains to be briefly provide for lots of the causes we talked about earlier than. Provided that burning gasoline nonetheless makes up a big portion of the UK’s electrical energy, this has pushed costs by the roof.
It is also not very windy! The UK is simply producing round 450 MW of electrical energy from wind proper now. That is about 1/tenth of the typical technology within the final 5 years. Fortunately, this can be a brief time period issue.
What’s extra, turbines that emit carbon into the environment are required to buy carbon allowances to offset their emissions, however Since 1 February 2021 the worth of the ‘European carbon allowance benchmark’ has elevated by 69%, driving costs even larger.
EUROPE’S ENERY CRUNCH: UK day-ahead electrical energy costs have surged to an all-time excessive of £219 per MWh, that is ***greater than quadruple*** the typical 2010-2020 value. A number of components affecting, together with sky-high gasoline and CO2 costs, low nuclear and super-low wind pic.twitter.com/kz2lBPlh0c
— Javier Blas (@JavierBlas) September 6, 2021
On the flipside, you will get paid a unprecedented quantity to export surplus photo voltaic/battery energy at present to assist help the grid: 60p+ this night. That is near 2,000% of the worth most individuals receives a commission to export on a normal Good Export Assure tariff!
Wow! I will positively have my batteries exporting tonight then – thanks! 🙂
— Bernard McCarty 💙 (@BernardMcCarty) September 6, 2021
29/06/2021
Low gasoline reserves in Europe, low gasoline provide into Europe from Russia and excessive demand from China imply Agile costs are larger than they’d usually be in the meanwhile:
For starters, gasoline storage throughout Europe is presently 33% under the 5 12 months common for this time of 12 months? So why does this matter? Effectively, a reasonably excessive portion of UK power nonetheless comes from burning gasoline, particularly throughout peak hours (4-7pm) when business remains to be working, and persons are coming residence from work. (That’s why sensible time-of-use-tariffs like Agile Octopus are so necessary – they reward clients for utilizing power throughout off-peak occasions, when it’s cheaper and greener – decreasing our dependence on burning gasoline!) All which means wholesale costs are trending larger in the meanwhile, which in flip results Agile Octopus – you possibly can view our Agile pricing calculation right here.
What’s extra, an unexpectedly chilly winter and robust post-Covid industrial demand throughout China elevate costs in Asia, so gasoline cargoes are presently favouring Asia over European gasoline hubs, elevating costs right here too. That is making the availability scarcity in Europe worse too.
Russia’s Gazprom additionally provides gasoline to Europe by quite a few pipelines. One of many main pipelines used to produce gasoline from Russia to Europe runs by Ukraine. This pipeline typically turns into embroiled within the ongoing political pressure between Ukraine and Russia and 2021 isn’t any completely different. Because of this, the stream of gasoline from Russia into Europe has remained decrease than anticipated regardless of European Gasoline costs hitting 13 12 months highs. A brand new pipeline that can bypass Ukraine and run below the Baltic sea (NordStream2) is because of come on provide in 2021 and consequently the market expects the worth of power to fall in 2022
Lastly, we’ve lately heard that the Dungeness B nuclear energy station won’t be returning to service. It has been offline since 2018, however the expectation was that it will be returned to service by the tip of 2021. The discount to power provide has had an impression on energy contracts dated for the close to future, nevertheless this has been partially offset by new interconnector capability.
All this has conspired to lift Agile costs in the meanwhile!
16 April 2021
Low wind, chilly temperatures and the ‘flexibility crunch’ are resulting in some larger Agile costs in the meanwhile
These are a few of the key causes for the upper ‘spot pricing’ seen previously few days…
- It’s very chilly, and there’s not been a lot wind – a killer combo meaning low wind technology, and extra individuals turning on the heating which will increase demand and pushes costs up.
- A number of completely different belongings and turbines have been offline, from EDF’s nuclear websites being offline to some key interconnectors (which transport energy to us from Europe) being down.
- Gasoline imports from Norway have been significantly low lately, driving up gasoline costs which then has a knock-on impact to all wholesale pricing (that is anticipated to select again as much as regular by the tip of April).
Some individuals have requested questions on costs going up longer-term – since October, wholesale has elevated round 33%. I needed to make just a few factors about that.
Firstly, anybody that is eager to check Agile pricing this 12 months to final 12 months ought to notice that final summer time’s costs have been, to make use of everybody’s favorite pandemic phrase – unprecedented. Final Summer time’s full halting of business and enterprise as we entered lockdown brought on a state of affairs not often seen within the power market – with record-low nationwide power demand, and a daily oversupply of inexperienced power resulting in sustained low costs.
Right here you possibly can see wholesale ‘baseload’ costs growing steadily previously 12 months – the worth to purchase for October 2021 is presently 60% costlier than the most cost effective interval previously 12 months (April twenty seventh 2020)
Principally, if you wish to examine this 12 months’s Agile costs to a ‘typical’ interval, final Summer time isn’t it. Agile clients acquired entry to a couple months of bonkers low cost costs, and a number of other durations of consumers getting paid as much as 10p/ kWh to make use of power – unbeatable costs as reward for utilizing up spare inexperienced energy, which actually did assist enormously to steadiness the grid by a chaotic time. As life begins to move again to ‘regular’, power costs are too.
A second motive costs are trying somewhat excessive lately is what we name the ‘flexibility crunch’. As we race to a 100% inexperienced power system, coal, gasoline and nuclear turbines are retiring, and extra renewables are coming onto the system. Nevertheless, elevated grid ‘flexibility’ – large-scale battery storage, pumped storage, and different options – aren’t ramping up as quick as we want them to to maintain the grid balanced.
Basically, our system is changing into extra reliant on when the wind blows and solar shines. When these issues aren’t occurring, we want to have the ability to name upon different technology to fill the hole. If there is not as a lot of that “different” technology then the costs shall be larger (typical ‘provide and demand’ drill).
We have to do extra, sooner, to verify we’ve acquired sufficient inexperienced methods to get energy when the wind isn’t blowing and the solar isn’t shining. Fortunately, Agile clients are the early adopters exhibiting that customers is usually a big a part of the answer.
The ultimate necessary issue to level out is carbon credit score costs. In the intervening time a number of the “different technology” that fills the gaps left by renewables comes from fossil gas sources. These turbines have to purchase carbon credit once they generate energy causes. In the intervening time the costs of these credit is double that of what it was again in June and it seems like there are some huge speculative traders who’re getting into the market.
Due to this the associated fee to generate from fossil sources is growing and subsequently, so do costs. Here is a extra detailed rationalization about what is going on on with the worth of carbon, and the way it’s impacting the facility market.
The inexperienced line is the worth of carbon, which has elevated an enormous quantity within the final 12 months, contributing to total wholesale will increase
Fortunately, Agile clients’ unimaginable efforts to shift their utilization out of the pricier time durations means some Agilers are nonetheless averaging cheaper than a normal tariff.
The common value of our electrical energy during the last month on @octopus_energy Agile tariff was 12.92p. The final 4 of these 31days included our new ASHP consumption; these days averaged 15.12p (excluding PV self consumption). pic.twitter.com/APAIl5IJaC
— Dominic Zapaman (@Zapaman) April 14, 2021
And the upper wholesale costs in the meanwhile are good information for individuals who generate their very own energy and export it on Outgoing Octopus…
6 January 2021
Chilly, nonetheless winter’s days, plus some modifications to some key energy stations the UK depends on, have led to larger Agile costs.
What’s driving excessive market costs?
The climate
The UK’s present local weather displays a fairly tough winter climate phenomenon. Areas of excessive strain everywhere in the UK have led to clear, cloudless skies, making issues extremely chilly, and making the wind drop off significantly. These components are a ‘excellent storm’ for top power costs. Why?
- The unseasonal chilly will increase power demand. It’s unusually chilly proper now. In London, for instance, climate is forecast to drop under 0 – 3 levels under the seasonal norm. When the climate’s colder than typical, the UK’s energy demand will increase as everybody cranks up the heating. Because the grid scrambles to make sure there’s sufficient energy on-line to satisfy everybody’s wants, the worth of energy goes up.
- Wind technology is especially low. Speaks for itself, actually. When the wind isn’t blowing, wind turbines can’t generate the identical quantity of (superbly low cost) energy and the grid has to depend on different energy sources which might value much more.
Right here you possibly can see wind dropping off fairly a bit in comparison with every week in the past.
A lot of energy stations are offline.
A lot of key energy stations are offline in the meanwhile – both for scheduled upkeep, or simply closed as a result of (confusingly) the worth they’ll get for his or her power is presently too low to justify protecting them working.
Too low, I hear you ask?! However power costs are actually excessive proper now! Here is why.
Calon Vitality, a key gasoline energy station, has closed off 2.3GW of gasoline. Hinkley B and Dungeness, two necessary nuclear turbines, are down a collective 2.2GW for the long run, and one other key nuclear website, Heysham 1, has been offline since September. It’s anticipated to return to service mid-January, however that may very well be pushed again.
Lastly, the Britned interconnector (an enormous wire below the ocean that runs energy from the Netherlands to the UK) had an unplanned shutdown in early December, which means the utmost capability of power that may journey down the wire at one time is 1GW lower than typical. This isn’t anticipated to alter till February.
With these websites down, or working with a lower-than-usual power capability, the UK’s power provide is outmatched by demand, which implies the grid has to pay an terrible lot extra to get the power it must energy everybody’s properties.
Yesterday, the day-ahead public sale hit the very best day by day common power value since September 2016 – £168/MWh. This technique ‘tightness’ is anticipated to final til Friday.
Crucial factor to recollect: Agile is about altering consumption habits to create long run financial savings, and crucially, to maneuver the UK in direction of a completely new form of power system centred on 100% renewable power.
Pricier days like these are the ‘tough’ that comes with the sleek we noticed for months of extremely low cost pricing all through Lockdown 1. Over the course of a 12 months, you possibly can nonetheless see nice financial savings from Agile as the widely decrease costs simply steadiness out these uncommon costly days.
As Agile buyer Jeff factors out, days like this present Agile working because it ought to:
You can also make unimaginable financial savings with Agile if you happen to transfer as a lot consumption as doable to the most cost effective occasions of day, or higher but – make use of power tech like storage batteries, EVs or photo voltaic panels to retailer low cost energy and export it throughout peak occasions.
On Agile Outgoing, our sensible export tariff, this ‘system tightness’ is majorly working in individuals’s favour – round 5pm at present, anybody on Outgoing who can export energy made 90p for each kWh they shared with the grid (for context, the typical ‘promote value’ for solar energy is between 5 and 6p).
That is the place time of use tariffs get actually fascinating. This night, clients on Octopus Outgoing are getting paid as much as 90p/kWh for energy exported to the grid. If my automobile was V2G enabled I may earn almost £20! @octopus_energy @ng_eso ⚡️🔋💰💰💰💰 pic.twitter.com/2ytscHQTJM
— John Taylor (@CoppiceJT) January 6, 2021
Due to our good Agile clients for being a part of this new manner of shopping for energy. Nowadays present as soon as once more the significance of power storage and sensible power tech to benefit from inexperienced energy when it is out there, so we are able to reserve it to make use of later (or share it!) when the system is tight. We’re trying ahead to the price of these applied sciences coming down for all.
As ever, if you happen to resolve you’d want the safety of a hard and fast price, simply get in contact and we’ll assist.
fifteenth September 2020
Low wind, low nuclear and better demand see wholesale costs growing a bit, plus, some context on Agile’s ‘costly’ days…
For the previous two days, we’ve seen barely larger costs on AgileOctopus, sparking a little bit of chat between clients.
Low wind technology on the grid, paired with decrease than typical ranges of nuclear, and better demand this week as all of us attempt to cool ourselves down by Summer time’s closing days, have seen wholesale costs going up somewhat.
The graph under exhibits the UK’s nationwide demand (or DANF – the highest black line) in comparison with renewable technology. You’ll be able to see wind technology, each on and offshore have dropped far under regular ranges.
We needed to place these “excessive costs” in context.
One of the best ways to save cash on AgileOctopus is to shift your consumption out of costly peaks.
Immediately, we noticed the 4-7pm peak attain our 35 p/ kWh capped value. That is as a result of demand is admittedly excessive, renewable technology is tremendous low, and fossil fuels are being burnt to select up the slack. These deliberate value incentives and deterrents are there to aid you change your power use habits to line up with occasions when renewable technology is excessive, and out of occasions when the grid is strained, and extra reliant on soiled fossil fuels.
Agile is designed to encourage you to maneuver you consumption out of the height to save cash, so the easiest way to take advantage of out of Agile is by shifting your consumption. Sure, the height costs on AgileOctopus are excessive – however costs are properly under market charges for the opposite 18 hours of the day.
The most affordable 4 hours of tomorrow’s pricing sit at 8.3p/ kWh. (That is almost half what most individuals pay on daily basis on a normal power tariff.)
A few of our clients mentioned it greatest:
I’ve managed to save lots of wherever from 6% to 42% within the final 7 days even with these larger costs. As @JibbleBobble says if you’re not planning your utilization to avoiding the height then Agile might be not for you.
— Anthony Breach (@anthonybreach) September 13, 2020
Even if you happen to do not shift your utilization, Agile isn’t any costlier than a mean tariff – in reality, it is usually nonetheless cheaper.
In response to AgileOctopus legend Mick www.energy-stats.uk, who makes use of our open API to publish day by day Agile pricing reviews, the day by day common Agile value for Tuesday fifteenth September is 15.8p / kWh. Our present normal versatile tariff goes for 14.8p / kWh. So, an AgileOctopus buyer’s ‘costliest day’ is simply a tiny quantity greater than a daily day on our normal tariff.
It will get higher – get a quote for a Massive 6 normal variable tariff and also you’ll discover they’re largely hovering across the 17p / kWh mark (some somewhat decrease, others even larger). So, once more, the uncommon ‘costly’ day on Agile remains to be fairly a bit cheaper than any day on a Massive 6 normal tariff.
So, to recap – if you happen to use Agile because it was designed, and shift your consumption out of the costly day by day peak, it can save you tons of cash (and save carbon whilst you’re doing it!)
And, even if you happen to do nothing in any respect to alter your consumption, Agile’s most “costly” day is inside a penny of a normal tariff with Octopus (and greater than 7% lower than the typical Massive 6 SVT).
Thanks a lot to our clients for coming together with us on this significant experiment for the way forward for power, shifting your consumption and altering age-old habits within the combat for the planet. It is wonderful to see that to date, this experiment is admittedly working.
Its positively shifted our utilization sample – I by no means even knew the dishwasher had a timer until we switched to Agile.
Photo voltaic + battery storage means we by no means draw something at peak occasions.— simon chetwynd (@chetwynd_simon) September 14, 2020
It is clearly disappointing when the worth is larger total however it’s what we signed up for, like every variable tariff. We have already adjusted our habits in our home and shift and cut back utilization after we can. Info is energy and selection is management.
— Mark Ford (@fordsville) September 13, 2020
And if you happen to do discover that AgileOctopus would not fit your family, we completely perceive. We have now zero exit charges, so you possibly can change to a different of our tariffs, or to a unique provider, any time.
twenty fourth August 2020
Agile costs have been bit larger than typical between 4-7pm demand peak as a consequence of low wind energy technology.
The pretty hefty ‘peak’ value for just a few half-hour slots at present was down to a couple components.
- Because the wind isn’t blowing, we’re low on wind energy. The old style ‘look out the window’ trick proves right right here: wind technology is simply fairly low, which implies the grid has to rely extra on different (pricier, typically dirtier) sources of power.
- Barely larger wholesale is typical of this time of 12 months. Proper about now, turbines are sometimes prepping and finishing up upkeep within the run-up to winter which implies it’s fairly widespread to have lower-than-usual availability. When power is extra ‘scarce’ than typical, costs are larger.
nineteenth August 2020
Why have been power costs larger in a heatwave?
Throughout an unimaginable heatwave, some Agile clients have been anticipating to see even decrease costs than typical – certainly when temperatures are up, photo voltaic panels are working time beyond regulation!? Nope. Wholesale costs have been larger than some anticipated. Why?
- There wasn’t a lot wind energy being generated. Within the UK, we now have a complete wind capability of over 22GW. On Wednesday, wind output was anticipated to drop under 3GW, (and all the way down to 1.5GW at peak occasions) and stay low for the remainder of the week.
- The heatwave drove power demand up, right here within the UK and world wide. Sizzling days all the time result in an elevated demand for air-con and different emergency cool-down strategies. The UK doesn’t have the identical air con load as different elements of the world, however what the UK does have shall be working time beyond regulation to forestall individuals from melting. The opposite factor price noting is that we’re linked to Europe through interconnectors. When it is sizzling in Europe, their demand will increase (the place air con is much extra widespread) and the costs in that market will increase. Merchants within the UK will benefit from the upper costs in Europe and nominate energy to be exported additional, growing UK energy demand.
- A BONUS ONE: Many individuals understandably suppose that hotter days may result in extra solar energy. Not so. Photo voltaic panels truly lose 10-25% of their effectivity at temperatures above 25 levels, and are extra impacted by components like cloud cowl.