July 8, 2022

Selling power back to the grid: what you need to know

Auckland city skyline in the distance.


Want to turn a profit from your solar panels? Let us introduce you to the wonderful world of solar buyback.

In this article we will cover

Investing in solar power for your home or business is a great way to save on your electricity bills. But what happens when you generate more power than you actually use? Do you just lose it? Not quite.

What is selling excess power?

After you’ve had your solar power system installed, you’ll instantly start generating power. This will offset your electricity bills, saving you money, but what if you generate more than you’re actually using?

You’d be surprised at how often this happens. Solar panels are getting more efficient every year, as are the appliances in your home. Just look at lightbulbs as an example: modern LED bulbs use 85 per cent less power than traditional incandescent bulbs. A similar trend can be seen across a whole heap of other devices, and that means one thing for solar power users: less energy used means more energy to spare from the panels.

When this happens, you have a choice. You can either store that excess power in solar batteries or you can sell it back to the grid.

Option 1: Solar Buyback

Rather than use your power, you can instead sell it back to your utilities company. This happens automatically once you’re set up, and you’ll get some cash back every cycle as a result. How much you get will depend on the retailer you sell it back to, and some of those retailers may have a limit on how much you can sell per month.

Sometimes you’ll see this process referred to as distribution generation, import/export, buy back or embedded generation. Don’t get confused - they all mean the same thing.

Option 2: Solar Storage

Selling your power back to the grid is a good option for excess power, but it’s not the most efficient thing to do. A lot of the time, the money you’ll get back won’t match the amount you would’ve saved by just using the power yourself. That’s why so many solar power users opt for solar batteries instead.

Solar batteries allow you to store your excess energy for later, drawing down the solar power into specialised batteries and releasing it when you have high energy demand that current power generation can’t keep up with, such as at night.

This allows you to continue powering your home with free solar energy, no matter what time of day it is.

Solar batteries can be installed into nearly any kind of existing solar system, though hybrid inverters are best suited for battery use. Their smarter technology is designed with solar storage in mind.

How to get started selling power back to the grid

If you like the idea of turning the tables on your electricity company - they pay you instead of the other way around - it can get a little complicated.

First, you have to get approval from your lines company. This is not the same as your electricity retailer, and your lines company will depend on where you are in the country. The Electricity Networks Association has a handy map that will tell you exactly who you need to get in touch with.

Second, you’ll need to get in touch with a local energy retailer that buys power from domestic generators like you. There are a lot of choices out there with various rules and rates, so you’ll need to compare to find the right one for you.

At this point, you’re ready to start selling! Your lines company and local retailer will be able to guide you through their own process, but you’re 95% of the way towards generating profit from your panels.

If that sounds like a lot of work, it is! That’s why we deal with this side of things on your behalf, if you install with us. We’ll recommend a retailer and deal with the lines company, and install any extra bits and pieces you may need. All you have to do is figure out what you’re going to do with the extra money. Get in touch with us here to find out more about this process.

How much can you earn by selling power back to the grid?

Different energy retailers will offer different prices for the energy you sell back to them. Most will have a fixed dollar amount, but some have a fluctuating ‘spot price’ that will change regularly. Some even have different prices depending on the plan you’re on.

There are a lot of different choices with a lot of different rates and rules. As a rule of thumb, at the time of writing, the average buyback rate is between $0.08 and $0.12 per kWh sold. How many kWh your system can sell will depend on how many panels you have, how much sunlight you have, and how much of the solar power you use directly. 

For example, if you have a 5kW system, you’ll only get around $2.5 per day even you sell all your solar generated power back to the grid. This isn’t a life-changing amount, as you can see, which is why we design systems to maximise internal usage, or to store power rather than sell it. Your solar power system will have a lot more impact that way.

One last important point. If you’re selling power back to an energy retailer, you’ll generally need to be signed up with that retailer for your own grid power use. If you generate enough solar power to cover all your needs and then some, this isn’t an issue, as you won’t be using grid energy. But if you’re like most solar users, you may need to draw on the grid from time to time, and retailers with better buyback prices may also have more expensive electricity prices for you.

When is the best time to sell power back to the grid?

If the sun is out, you can generate power to sell! However, there are a few times when your power generation will be at its most efficient, and therefore produce more profit from solar buyback.

The best time for solar generation is usually in the middle of the day. This is because the sun is high and the maximum amount of sunlight is hitting your solar panels. Importantly, it’s also when energy demand is low - it’s more likely that there are fewer people in the house (as they’re at work) and thus fewer appliances on, so direct energy demand is lower. Less energy used means more energy to sell. 

This makes it the best time to sell energy back to the grid - but it’s also the best time to generate power and store it in your batteries instead, if you have the capacity. Either way, you’ll be saving (or earning back) money that your utilities company would otherwise be charging you for. That’s a solar-powered win-win!

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