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Understanding Your Power Bill

Understanding your power bill

When assessing the viability with solar you first need to understand how to read our electricity bill and you will need to manage your expectations around the results.

If you have a very high power bill or you use a lot of a large amount of electricity you will be billed differently to most other consumers. The price that you pay for each kWh of electricity will be very low but you will be getting charged a ‘demand charge’ which will be very expensive. Small and medium enterprises will avoid the demand tariffs but will have general supply tariffs that have a higher cost per kWh for all electricity consumed.

Small & Medium Enterprises: General Supply Tariffs:

Here is a power bill taken from a Gem Energy customer in Queensland on the Ergon Energy network.

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This Tariff 20 General Supply is an easy tariff to follow as there is a flat rate for power throughout the day and night. A bill like this would be a good candidate for solar as they are a business that operates from 8am to 5pm 7 days a week which is when the solar produces the most power. With a correctly sized system almost every kWh of electricity that has been produced from the solar should be used at the property therefore off-setting a cost of $0.23 per kWh if bought from the grid.

In this instance the customer was running a pump that was feeding water to crops at Bundaberg Wholesale Palms. They have a 7.5kW pump but opted for 11.5kW of solar panels to ensure that from 8am to 5pm they would be producing enough power to off-set all of their costs. Had they opted for a 7.5kW system to match the size of the pump they would only come close to off-setting their usage in the middle of the day when the solar system is peaking. The customer also has plans to add another pump to the bill and this is how the system looks now.

The same customer has another electricity account that is on the same general 20 tariff mixed with a residential tariff that supplies power to a grounds-keepers property. We installed 36.5kW over 2 different buildings facing North East and North West to take advantage of the morning and afternoon sun. To maximise the effect on the solar we rewired the existing meters and shifted load onto the main Tariff 20 General Supply as this was the tariff the solar is connected to.

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Large Enterprises: Demand Tariffs:

These power bills are usually the hardest to understand and the true cost can be grossly misunderstood. When you look at the per kWh charge compared to the Tariff 20 General Supply it’s initially hard to understand why the power bills are so high but after conducting a more detailed analysis the true cost becomes more visible. This is how a large power bill looks:

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On the surface the peak charges only come to 6.9c per kWh but when you add the Network Charges and the Other Charges the true cost per kWh comes to almost $0.10 per kWh which is a large increase but still a reasonable rate for power.

There are a lot of fixed costs with a tariff like this such as DUOS & TOUS Fixed Charges which are unavoidable and solar will not reduce these charges.

The main variable cost on this bill that solar can impact is the DUOS & TUOS Demand Above Threshold under Network Charges. On this particular bill these costs contribute to 35% of the total power bill. The demand charge is the one point in the billing cycle (usually monthly) where the most power has been drawn from the grid at one time. These charges usually occur around 7am – 8am with many businesses as this is when the lighting in the building is turned on, air conditioners are started and computers are turned on etc.

Understanding when your demand charges occur are fundamental in assessing the viability of an investment into solar and this information can be obtained by phoning your power company and asking for a 12 month load profile or otherwise known as interval data. This can cost up to $150 for the report but it is without any doubt worth the investment.

Here is a days’ worth of data taken from the interval data of a Gem Energy account in Queensland. The black circled spike in the graph represents the peak Demand Charge. Theoretically, if this was the largest spike the customer would be billed for 108kW. The itemized bill above shows a demand charge of $33.63 per kW as the demand charge so this customer would be billed 108kW x $33.63 which is $3,632.04 per month.

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The good thing about this particular company’s energy consumption is that the peak is during daylight hours in the afternoon. So we know that if we were to orientate the panels west to face the sun when they have their power spikes we will offset some of that demand charge making a big dent on the bill. Alternatively, if they had a power spike at 9am we would face the panels east. The savings made from off-setting the demand charge greatly outweigh the savings made by off-setting the cost of buying the electricity from the grid at 10 cents per kWh.

Even if we were able to reduce that peak at 3.30pm the customer would still be peaking at 85kW at 8pm. At this time the solar is producing no power so we are unable to do anything about that. This is why it is important to obtain this information so we can manage expectations of savings and quote and estimate accordingly.

This customer opted for a 100kWP solar system with 400 solar panels to reduce the amount of electricity they are buying during the daylight operations hours of the business. Through a detailed analysis of the property we have been able to identify the machinery causing the power spikes and as per our advice the client has been able to shift the time the machinery is used from the afternoon to the middle of the day when the solar system is performing at its best. This is how we will achieve the best possible outcome for our customers.

Here is a photo of the system. The panels were split 200 facing east and 200 facing west so the system would peak in the middle of the day as the panels are mounted on a 10 degree pitch. Having a flat roof in this instance is quite beneficial although it will require more maintenance due to a dirt build up that will occur on the panels that will not be sufficiently cleaned with rainfall.

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Although power bills change, budgets change and there are a lot of other factors to consider, all of our customers are expecting approximately 20% per year return or more.

In summary, the most important things are to understand your electricity bill and to analyse where the power is being used. Once this has been identified we can then work out a course of action and get an idea of realistic savings you can expect and where these savings will come from. It’s then a case of finding a solution to fit the budget or to cure the problem for good.

It’s not in all cases where you have high power bills that solar is the best answer. There may be other more cost effective options available which you can find out more about by clicking here.