OMG its actually happened, I have been sent an invoice (well a statement really I guess) for the sale of my solar power for the first time. The spoiler is that its about what I expected, but that doesn’t stop me breaking it down in extreme detail! If you are googling for the details of what a power purchase agreement (PPA) for a solar farm is, and how its calculated and how much you actually get paid etc, then you have probably found the right blog :D.
So firstly, lets have some disclaimers. The farm was only energized on October 4th, and this payment is for October, so we already lost 4 days (we didn’t switch on at 8am :D). We also had to turn everything off for two days later in the month so that we could fill in some earthworks around some high voltage cabling, and they wouldn’t do that while they were live. TBH they were only 400v I think, and this seemed a bit overkill to me, but then I don’t drive a digging machine :D.
Also be aware that this was OCTOBER, so not exactly peak sunshine roughly half way up the west side of the UK, so do not extrapolate this in a linear sense to be a typical month because it was not. So how much is the total paid?
Roughly £5,300
To break it down in more detail, the amount is calculated like this:
- Electricity output £4,400
- REGO Certificates £0
- DUoS benefits £945
- DUoS costs -£12
- Triad benefits £0
- Admin fees -£25
All figures are slightly approximated as I’m not sure what I can / cannot be explicit about and don’t want to be told off :D. Anyway to break it down…
Electricity output is the amount I can see that many MWH of power for. More on that later.
REGO certificates are things I do not have yet due to stupid insane *are you kidding me* levels of bureaucratic BS, but I WILL get them, and they will be backdated. I need to collect a ton of paperwork and then sit and wait for months for the awarding government body to try their hardest to find a missing comma or i without a dot. I wish I was joking.
DUoS. Well this is a whole world of insane complexity. The acronym stands for ‘Distribution Use of System’. Its the bewildering network of charges and fees and credits that are calculated depending where you are in the national network of distribution power lines. Basically if you generating power next door to a substation, and the re is an aluminum smelter next door to that, then all of the power you generate will stay local, and not flow out onto the wider ‘national grid’, so you are not heaping pressure on the big pylon networks. Thats the ideal situation. Amazingly, you can get both charges and benefits from the exact same system. My solar farm is fairly remote, but small enough that our energy will only ever go to the nearest town. So we got charged £12 for being so remote and using some local pylons, but credited £945 because we are remote enough that us powering that town a bit more means LESS pressure on the big power lines heading from elsewhere to that town.
Think of it as toll road charges.
Triad benefits: This is something very weird and arcane that makes DUoS look simple. Here is the googled explanation.
The Distribution Network Operators (DNO) pay what you might call a standing charge to National Grid (NG). This charge is set according to the amount of electricity being drawn by the DNO when the UK as a whole is using the most. More specifically, it is the average MW being drawn during the three highest half-hour periods (subject to being a minimum of 10 days apart) of UK electricity consumption between 1st November and 28th February inclusive. The cost incurred by the DNO is then passed on to energy suppliers who in turn charge it to their customers. (from:https://www.nowthenenergy.co.uk/news/triads2021 )
If you think ‘WTF? why do they choose three? and why those months? and why half hour? Yup : welcome to the UK energy market. You thought C++ was complex? Ha! Anyway, looks like we are unaffected which is good?
Now actually I will get paid MORE than this, because I get paid VAT (sales tax) but I then have to pay that to the government anyway, so its just a bureaucratic waste of time and doesn’t figure into the calculations.
But Wait! There is more! The ‘Electricity output’ figure is more involved. My actual PPA did not start until November 1st. From that point I get a fixed price per MWH for the next year, but up until then, the price was ‘floating’. I got paid the ‘market ‘system sell price’ price each half hour. (The whole UK commercial energy sector works on half hour billing). They send you a handy spreadsheet showing what the price was every half hour for the whole month. Do you think it was relatively stable? Ha. Behold:
Well I guess two things stand out right? Firstly what the hell was that spike? and secondly WTF does it go negative? To answer the second part first, YES, at times I was being charged actual money to generate power. When its super-windy and super-sunny, and mild, and the Uk has too much energy and we cannot cope with any more, the wholesale energy price goes negative. It happened a few times that month, but as you can see its very short lived. With a solar plant, you can’t easily switch it off (and you wouldnt want to keep turning it off and on again), but if you are burning physical fuel like gas, coal or oil, or even wood, then that price signal tells you to stop imemdiately, which is why I think it recover.s
But hey-ho check out settlement half hour #564, when I was paid a whopping £669 per MWH. Oh yes. Sadly there were only a few brief periods of this.It seems to have happened on the 11th October about 75% through the day (so 6pm) Lets look at country wide stats. Seemingly no explanation here:
But in a sense… it doesn’t matter, because annoyingly its October and solar output at 6PM on 11th October was likely pitiful, if not zero. I checked…, and it was 4.89kw at that time. So the super high price only earned me £3.27 per hour. Actually less, because the power trailed off and the price dropped off too.
FWIW this is why in some cases lithium-ion grid-scale batteries can make sense. If I had one (I ran the numbers and couldn’t justify it for such a small site), I could have stored 1 MWH in it from earlier in the day, then let it flow out at 6PM and pocketed a handy £669. The trouble is I would need about £200,000 to install that battery, and you need to be sure you are going to get enough of a return on those occasional spikes to make it worthwhile. Plus other people are doing the same thing, so as more grid scale storage is rolled out, that chart is going to look a lot less spiky. Especially over the lifetime of the farm (25+ years). Note you can also do ‘peak shaving’ which improves the economics. I blogged about that previously.
Anyway, all very exciting to see actual payments heading my way. 10 days until the money is transferred. It will be WEIRD to see money flow INTO this company. Its been an absolute money pit until now :D.