Max Power: Lowering bills for green businesses

The Max Power model works for businesses that have solar, onshore wind turbines, hydro power, geothermal or even battery storage they wish to share with their other sites. This new tariff can help businesses across sectors including agriculture, retail, logistics, warehousing, supermarkets, FMCG, and many more.

The concept 🤯

For Max Power, rates are calculated at a business-level rather than a site by site level. This allows us to offer a single import rate and a single export rate for all the sites. From an energy perspective, we’ve re-drawn where a business starts and ends!

This means a business only gets billed for energy that enters or leaves its portfolio of sites.

What do we mean by a site?

A site is any specific location that has an electricity demand and/or co-located electricity generation. For example, all of the following are a ‘site’:

• a warehouse with solar panels on it’s roof
• a factory without solar panels on it’s roof
• a wind turbine in a field
• even battery storage devices

How do we calculate the energy flows?

In the UK, energy is 'settled' in half-hour periods and therefore so is Max Power. If in any half-hour period a site in the business is exporting energy, this energy enters a ‘pool’ of energy, from which any other site can draw energy. If the energy in the pool is not enough to meet every site’s demand, then energy is imported from the grid as normal. If there’s too much energy in the pool, or not enough demand, then the excess is exported and sold to the grid.

Overall, this increases the amount of homegrown energy a business utilises across its multiple sites, while reducing a business’ reliance on other sources of energy. This brings substantial savings to the customer and increases renewable energy consumption.

Pricing, how does it work?

As mentioned before, Octopus will price the energy as a portfolio in one go. This means that we will need to accurately forecast how much energy we expect to export from and import to the business as a whole. This also means the customer only has one Octopus account to keep track of for the entire business!

Export pricing

Pricing of the export is simple, any energy not time-matched will be paid for at a bespoke fixed rate. Any energy used at another site isn’t paid for, as Octopus never receives it and instead the business pockets the savings!

Import pricing

The import is a little more complicated, but stick with us on this.

The price of imported energy actually consists of ‘commodity’ and ‘non-commodity’ costs. ‘Commodity’ costs are often called wholesale costs, which is how much the electricity supplier actually pays for your energy. Whereas, the ‘non-commodity’ costs are the costs for getting that energy to you, these include: standing charges, capacity charges, transmission costs, distribution costs, and many others. For more information look here.

For Max Power a weighted-average of all these costs is used to calculate the import rates.

Time-Matched Energy

Energy imported by one site from another will avoid the wholesale costs, as the business is supplying their own energy. However, the costs of transporting energy can’t be avoided. Therefore, the non-commodity costs will be passed onto the consumer, but don't worry these are typically only a small portion of the overall price. So shared energy is very cheap, usually 80% cheaper!

How to get the most out of Max Power

For a business to maximise its savings it should maximise the amount of its own energy it uses. Each kWh of its own energy it uses is a saving, whether it's used on the site it's generated or at different site.

To maximise these kWhs businesses should:

1. Shift energy consumption to when there is excess energy being generated
2. Optimise the capacity of renewable generation to the whole business’ consumption, not to the consumption of each sites

One last consideration. The more sites a business brings onto Max Power, the more likely it is that the energy it generates will be used by the portfolio.