Understanding Your Power BillOne part of assessing your site’s viability for Solar.
Learn how to read your electricity bill and manage your expectations around the results.
Assessing your site’s viability for solar includes an assessment of your electricity bill. You can learn more on this page or email us your bill and we will assess it for you.
If your power bill is very high or you use large amounts of electricity, you get billed differently to most other consumers. While you pay a very low price for each kWh of electricity, you get hit with a very expensive ‘demand charge.’ Small and medium enterprises may avoid the demand tariffs but will have general supply tariffs that have a higher cost per kWh for all electricity consumed.
CASE STUDY – Small & Medium Enterprises: General Supply Tariffs
The following power bill was taken from a GEM Energy customer in Queensland on the Ergon Energy network.
This ‘Tariff 20 General Supply’ is an easy tariff to follow as there is a flat rate for power throughout the day and night. This business is a good candidate for solar as it operates from 8 am to 5 pm, seven days a week, which is when the Solar produces the most power. With a correctly sized system almost every kWh of solar electricity produced should be used at the property, therefore offsetting a cost of $0.23 per kWh if bought from the grid.
In this instance, our customer, Bundaberg Wholesale Palms, was running a pump for feeding water to crops.
They had a 7.5kW pump but opted for 11.5kW of solar panels, thus ensuring enough power would be produced to offset all of their costs.
Had they chosen a 7.5kW system to match the size of the pump, they would only come close to offsetting their usage in the middle of the day when the solar system is peaking.
The customer is also planning to add another pump to the bill in the future.
Bundaberg Wholesale Palms has a second electricity account.
That second account is on the same ‘Tariff 20 General Supply’ mixed with a residential tariff that supplies power to a grounds keeper’s property.
We installed 36.5kW of solar panels over two different buildings facing North East and North West to take advantage of the morning and afternoon sun.
To maximize the effect on the solar we re-wired the existing meters and shifted load onto the main ‘Tariff 20 General Supply’ as this was the tariff the solar is connected to.
See an image of the whole site below, with the solar array for the pumps at the top and towards the right of the image.
LARGE ENTERPRISES – Demand Tariffs
These power bills are usually the hardest to understand.
When comparing the per kWh charge to the ‘Tariff 20 General Supply’ it is initially hard to understand why the power bills are so high. After conducting a more detailed analysis the true cost becomes more visible.
This is what a large power bill looks like on the right.
On the surface, the peak charges only come to 6.9c per kWh but when adding the ‘Network Charges’ and ‘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 will not be reduced by solar.
The main variable cost on this bill that solar can impact is the ‘DUOS & TUOS Demand Above Threshold’ under ‘Network Charges.’ In this particular example, 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. With many businesses, these charges occur around 7 am – 8 am when the lights and computers are turned on, and air conditioners are started.
Understanding at what times your demand charges occur is fundamental when assessing the viability of a solar energy investment. You can obtain this information from your energy provider by asking for a 12-month load profile, also known as interval data. The report can cost up to $150, but it is without any doubt worth the investment.
The black circled spike in the graph represents the Peak Demand Charge. If this were the largest spike of the month, the customer would be billed for 108kW.
The itemized bill above shows a demand charge of $33.63 per kW, meaning that this customer would be billed 108kW x $33.63 which is $3,632.04 per month.
The good thing about this particular company’s energy consumption is that the peak is during daylight hours in the afternoon.
This means that if we orientate the panels West to face the sun when they have their power spikes, we will offset some of that demand charge and make a big dent on the bill.
Alternatively, if the power spikes occur at 9 am, we would face the panels east. The savings made from offsetting the demand charge greatly outweigh the savings made by offsetting the cost of buying the electricity from the grid at 10 cents per kWh.
However, even if we were able to reduce that peak at 3:30 pm, the customer would still be peaking at 85kW at 8 pm. At this time the solar is producing no power, so we are unable to do anything. This is a great example of why it is important to obtain the load profile information so we can manage expectations of savings, and quote and estimate accordingly.
Our customer opted for a 100kWP solar system with 400 solar panels to reduce the amount of electricity they are buying during the daylight operating hours of the business. Through a detailed analysis, we were able to identify the machinery causing the power spikes, and the client has been able to shift the machine’s operation time from the afternoon to the middle of the day when the solar system is performing at its best.
This is how GEM Energy achieves the best possible outcome for our customers.
See the photo of the system above. 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 dirt build up which occurs on panels that are not sufficiently cleaned with rainfall.
The most important things when considering solar:
- Understand your electricity bill.
- Analyze where and when power is being used.
Once this has been identified, we can 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 and cure the problem for good.
Although power bills vary, 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.
Solar is not always the best answer when you have high power bills, but there may be other cost-effective options available for you. Find out by reading more about GEM Energy’s Three-Way Approach or contacting us.
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