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Why do I get paid less for exporting electricity, than I pay for importing electricity?

Owning some form of renewable generation - such as solar or wind - means you can get paid for the power you put back into the grid.

Octopus sees the future of energy as one where people are closely connected with their power; from local community energy schemes like Fan Club, to individuals generating their own power and being paid for it with tariffs like Outgoing Octopus. That’s why our export tariffs are amongst the highest paying in the market.

We're also the only supplier in the market offering a domestic half-hourly export tariff; Agile Outgoing. This is linked directly to wholesale prices, and the amount you're paid changes every half hour based on day ahead wholesale rates. On this tariff in 2022 customers in the London area were paid £1.29 for every kWh of electricity they sent back to the grid (taken from the Energy Stats website).

Those high prices aren't available for fixed export tariffs like Smart Export Guarantee, so you may ask: "why is the price I get paid per kWh less than what an energy company charges for each kWh of electricity I use?"

When we sell power to customers, there’s the wholesale cost element; the market price Octopus buys that energy for. That’s an upfront cost, and we always try to buy a full 12 months worth of electricity for each customer. Once that power has been “allocated”, it then needs to get to your home. This is where a lot of other fixed - and unavoidable - costs come into play.

First there’s the transmission and network costs, paid to the companies that maintain the pipes and wires in your area. Then there’s environmental levies and social schemes like Warm Home Discount. Finally there’s our operating costs, which are pretty slim as we are extremely efficient compared to most other energy suppliers.

In short; there are a huge number of unavoidable costs involved in selling you energy and getting it to your home.

When you sell energy to us, you’re not paying a bunch of industry and social costs. This doesn’t make your power any less valuable, it just means you’re only really taking an “operational” cut, which in the grand scheme is a fairly small part of the cost stack when you pay us for energy.

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