by Andrew Kneeshaw, Managing Director FEC Energy
A ‘managed’ power sales contract may get you a better deal; here are five reasons why:
- You’ll get the best ‘commodity’ price for the energy you generate – A managed sales contract is ‘system-cost-reflective’, so you get the price that the energy is worth at the time of generation. An alternative fixed ‘power purchase’ may be simpler to understand, but you will get an unexciting price for your electricity. With the managed contract, the day-to-day price will be more volatile, but the outturn is likely to be better in the longer term.
- You can benefit from ‘Use of System’ payments – Part of the payment, received from your electricity buyer, comes from the savings made by the electricity distribution company as a result of you generating locally. A fixed power purchase often undervalues these because the buyer fails to pass through the full amount saved. With a managed contract, these ‘pass-through’ savings are set out in full, so you can be sure you get the full amounts.
- You’ll know the best times to generate – A cost-reflective export arrangement reveals the times when generation margins are highest, or when they are so low that it’s not worth operating.
- You can get extra income for generating at peak times – Incentive payments are available to businesses who help the National Grid balance generation and demand. The TRIAD system, for instance, pays up to £40,000/MW/annum to generators who operate during the three peak demand periods over the winter.
- No more renegotiation every year – With a managed cost-reflective contract, you get what the electricity trading network offers at the time of trade, so there’s no going back every year or so and renegotiating a price. It’s as if you were going down the market to sell stock. You get the fair price on the day.
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