Wholesale electricity plans, explained simply

How electricity is priced before it reaches you

Most of Australia runs on one big market, the National Electricity Market, or NEM. It covers Queensland, New South Wales, the ACT, Victoria, South Australia and Tasmania. Western Australia and the Northern Territory run separate systems, so wholesale plans are not offered there.

Every five minutes, the market operator (AEMO) lines up the offers from every generator in each state, from coal and gas to wind farms and big batteries, and dispatches the cheapest ones needed to meet demand. The offer that fills the last bit of demand sets the price for everyone in that five minutes. That is the wholesale price.

On an ordinary retail plan, your retailer pays that moving price and sells it to you at a flat rate, or a time-of-use rate set months in advance. You never see the swings. The retailer carries the risk and charges a margin for it.

What a wholesale plan changes

A wholesale plan, sometimes called a wholesale-passthrough or spot-price plan, hands you the moving price directly. Retailers such as Amber and Localvolts charge a subscription or fee instead of a margin on the energy, then pass through the wholesale price plus the network and market charges every retailer has to pay.

That works in both directions. When you import, you pay the price for that five minutes. When you export from solar or a battery, you are paid the price for that five minutes too.

What the price does in a day

This is the shape that matters. The exact numbers change every day, but the pattern repeats.

• Middle of the day: rooftop solar floods the grid. On sunny spring and autumn days the price regularly falls below zero, especially in South Australia and Victoria. A negative price means the market is paying people to use power.
• Late afternoon into evening: solar fades just as everyone gets home and turns things on. The price climbs, and on hot or tight days it can spike to several dollars per kWh.
• Overnight: demand drops and the price settles back down.

There are limits. The market has a price cap, set each financial year by the energy market rule maker, and if prices stay extreme for too long an administered cap kicks in and holds prices much lower until things settle.

Where a battery fits

A battery turns those swings into something you can use. The idea is simple: fill up when power is cheap, use or sell it when power is expensive. People call it arbitrage, but it is the same as buying fruit at the market at closing time.

A well set up battery on a wholesale plan will typically:

1. Charge from your solar, or even from the grid, in the cheap or negative midday hours.
2. Run your home through the evening so you are not buying at the peak.
3. Sell spare energy back when the price spikes.

The catch is that someone has to make those decisions every five minutes. Nobody does that by hand. Amber has its own automation called SmartShift. Sunnn+ does the same job for Fox ESS, SAJ, Sungrow, Deye, Sunsynk and Tesla Powerwall batteries on Localvolts, reading live wholesale prices and trading within the reserve and export limits you set.

The honest downside

A wholesale plan is not free money, and anyone who tells you otherwise is selling something.

• You carry the spikes. If your battery is empty, or your load is bigger than it can cover, you pay the spike price for whatever you import. A heatwave evening with the air conditioning running and a flat battery can be expensive.
• Without a battery it is a gamble. Solar alone mostly exports at midday, which is exactly when the price is lowest or negative. A solar-only home on a wholesale plan can end up worse off than on a good fixed plan.
• It needs automation. A battery left on a default self-use setting will not chase prices. The gains come from something trading it well.

Who it suits, and who it does not

A wholesale plan tends to suit you if:

• You have a battery big enough to cover your evenings with some to spare.
• Something is trading it automatically, like SmartShift or Sunnn+.
• You are comfortable with a bill that moves month to month in exchange for more upside.

It tends not to suit you if you want a predictable bill, have solar without a battery, or have heavy evening use your battery cannot cover. For a lot of battery homes a fixed plan built for batteries is the better fit. GloBird's ZeroHero is one we often point people to: free grid power in a midday window, a boosted rate for what you export in the evening peak, and nothing exposed to a bad day on the market.

How Sunnn designs for it

We are not an electricity retailer. We design and quote solar and battery systems, arrange installation through accredited installers, and set the battery up so it is ready to trade on a wholesale plan from day one. Sizing matters more here than on a normal plan, because the battery has to cover your evening and still have room to sell. We cover that in How big a home battery do you need?

See the live market for yourself on How it works, or model a wholesale plan against your own bill in the calculator. Figures there are modelled estimates, not guarantees.