Octopus Energy Launch the Tesla Energy Plan
Electricity utility Octopus Energy have teamed up with Tesla to offer the Tesla Energy Plan – a unique electricity specifically for Tesla Powerwall owners. By allowing Tesla to control the operation of the battery, householders can access both the best import prices available on the market as well as the highest prices for exported electricity.
What are the Tesla Energy Plan Tariffs?
For households with a Tesla Powerwall, electricity costs between 10p/kWh and 12p/kWh to import, and Octopus will pay you the same rate for your exported electricity. The exact rates will depend on your postcode as some places are more expensive to supply than others. The tariff also has a 21p/day standing charge.
For comparison, a typical conventional electricity tariff would cost 15p/kWh for imported electricity, plus standing charges. The amount paid for exported electricity depends on the amount offered by your supplier under the terms of the Smart Export Guarantee (SEG). The highest rate on the market is 5.5p/kWh, with many suppliers offering much less than this.
Who is eligible for the Tesla Energy Plan?
Several criteria need to be met to sign up for the Tesla Energy Plan. Below is the criteria as of 26/08/21.
- One or more ‘Powerwall 2’ batteries and an MCS-certified Solar Panel installation (any size, up to 9 kWp per Powerwall installed – e.g. 5x Powerwall batteries on-site could allow for up to 45kWp solar panels)
- Residential electricity supply
- Compatible smart meter
- Daytime consumption (from 07:00-19:30 ) less than 9,500 kWh per year, per-Powerwall-installed
You can find more information here: https://www.tesla.com/en_GB/support/tesla-energy-plan-faqs#eligibility
How do they do this?
Home battery owners typically store electricity generated by their solar panels and use this energy through the evening and night-time. There is a strong incentive for householders to do this – they are better off not importing electricity at 15p/kWh than exporting it for just 5p/kWh.
This incentivises households to be self-sufficient in their operation. However, there are wider electricity system benefits from battery storage. Operating a home battery for the service of the broader system can offer further financial benefits to the householder – and this is what the Tesla Energy Plan does.
The scheme creates value in three different ways:
- Electricity prices vary on the wholesale market vary, so Octopus can buy the cheapest renewable electricity available and use it to charge up batteries.
- They can also control when electricity might be discharged from batteries back to the grid, and do this at peak times when providing electricity is most valuable.
- By aggregating many batteries together nationwide, charging and discharging batteries can also be paid for providing grid services. These services help keep the national and local electricity grids running optimally. Services include helping maintain a precise frequency on the grid or providing a short burst of power in the event of a failure elsewhere on the system.
Tesla control the operation of their fleet of batteries nationwide to behave as if t were one large generator – this is called a Virtual Power Plant (VPP). Tesla controls the operation of the batteries – when they charge and discharge. Octopus manages the financial side of this – customer liaison and billing.
By optimising in this way, Octopus can bundle everything together into a very attractive flat-rate tariff.
The real cleverness in the tariff is paying equal amounts for imported and exported electricity. This ‘net-metering’ approach means there is no financial penalty to the householder no matter what the battery is doing. Export electricity back to the grid? You get 10-12p/kWh. Hold on to your electricity for use later? You save 10-12p/kWh from not importing. This gives Tesla complete flexibility in how they choose to operate the battery, whilst simultaneously providing the householder with a great deal on their bills. Genius.
Is the Tesla Energy Plan a good deal?
Our residential project manager, Neil Russell, has been crunching the numbers on this! Neil has modelled the expected annual electricity bills from a range of different electricity tariffs to see which ones offer the greatest benefits.
For more background, do check out our guide to electricity tariffs for the renewable home where we take a broad survey of tariffs for green electricity supply, and for integrating with battery storage and electric vehicles.
Tesla Energy Plan Modelled Annual Bill
When comparing the annual cost of electricity between the Tesla Energy tariff, Octopus Go and some other tariffs offered by competing companies we get the interesting table below. This simulation assumes an average electricity usage of 3,400 kWh a year in a home with a Powerwall and no Solar PV array. Please note, to be eligible for the Tesla Energy Plan, you must have a solar PV array. We assumed no PV array for illustration purposes only.
The Octopus Go tariff is a day/night tariff, offering electricity at 5p/kWh between 00:30 and 4:30 and 14p/kWh at other times. Export payments would be under the terms of the Smart Export Guarantee. The cheap night rate that Octopus Go offers allows a significant reduction in bills. The Powerwall can charge from the lower night rate, to be used later in the day when electricity prices are higher.
The Tesla Energy Plan, even in the instances when the client has no solar, still comes out cheaper than most of the competition. This is due to the lack of standing charge and a cheap import tariff. In the above graph, we have assumed 11p/kWh import and export tariff on the Tesla Energy Plan.
Octopus Go Tariff vs the Tesla Energy Plan
Octopus is offering two generous tariffs for battery and EV owners in the form of Octopus Go and the Tesla Energy Plan. But which one provides households with the greatest savings?
The table below compares both tariffs, depending on the amount of electricity consumed and produced in the home. Positives values (blue) represent the financial benefits where the Octopus Go tariff is beneficial. Negative values (orange) represent the bill savings where the Tesla Energy tariff is a better option.
From this table, we can draw four different scenarios for customers with a Powerwall and solar PV.
- Zone A – If you produce more than you use – that is to say your house is a net exporter – then you will benefit most from the Tesla Energy Plan due to the 11p/kWh export tariff.
- Zone B – If you are consuming somewhat more than you produce, then Octopus Go is your best bet. Here the electricity stored in the Tesla Powerwall covers the costlier evening electricity, with remaining import being dominated by the 5p night time tariff on Octopus Go. This is likely to be the case for most EV drivers.
- Zone C – If you have both high generation and high load, the Tesla Powerwall does not fully cover the evening load. This means the 11p evening import price on Tesla Energy Tariff is a better deal than the 14p/kWh on Octopus Go. In this case, a second Powerall would be beneficial, and this would favour Octopus Go again.
- Zone D – If you consume much more than you generate. Once again, the Tesla Powerwall does not cover the evening load, so the 11p import price on Tesla Energy Tariff is a better deal than the 14p/kWh on Octopus Go. It has to be said though, such extremes of high use and low generation are pretty unlikely in the real world.
Choosing the right tariff to optimise the financial benefits you receive from your battery storage or electric vehicle is tricky. But Octopus appear to have two market-leading tariffs from which to choose.
The Tesla Energy Plan is a significant development for battery storage for the next decade. It extends the benefit of storage by interacting with the broader electricity system. When it’s windy, your battery will be soaking up all that renewable power, not just what’s coming from your own roof. And that will help us get even more renewables onto the electricity grid. And it’s all possible because of the equal prices paid for imported and exported electricity – which seems a little thing, but it is going to have a huge impact.