OWNERS of landed properties and businesses who have solar panels on their roofs will soon be able to sell their excess solar-generated electricity at a price dictated by them.
They will be able to find buyers for this electricity through a peer-to-peer grid-scale trading platform developed by Senoko Energy. Called SolarShare 2.0, it is the first of its kind in Singapore, and will go live on Nov 1.
Currently, solar panel owners are able to sell their surplus solar-generated electricity to the grid at prices determined in one of two ways: one pegs the prices by the prevailing electricity tariff minus grid charges; the other references the prevailing half-hourly wholesale electricity price.
The rate a seller would have been given on Wednesday (Oct 18) under the tariff model, applicable only to SP Group customers, was 22.45 cents per kilowatt-hour (kWh). A seller going by the wholesale price model would have been paid between 14.18 cents/kWh and 48.91 cents/kWh over the course of the day.
The platform thus offers an opportunity for panel owners to sell their excess juice at rates higher than those from these two methods if they list on SolarShare 2.0. Their asking rates could, for instance, be more competitive than those levied on consumers by the open electricity market; commercial electricity retailers charge fixed rates of between 29.3 cents/kWh and 41.34 cents/kWh for their green packages.
Sellers on the platform should, however, factor in Senoko Energy’s 5 per cent platform fee for every electron transacted.
Buyers can be anyone willing to pay a monthly subscription fee to be linked to the micro-producer of their purchased electricity; purchasing households will pay S$5.40 to Senoko Energy, levied on top of the price they agree to pay the selling party.
The fee goes up to S$10.80 for businesses that consume up to 1.5 megawatt hour (MWh) a month, and S$37.80 for those needing up to 8 MWh monthly.
At the launch of SolarShare 2.0 on Wednesday, Senoko Energy’s senior vice-president for commercial James Chong said one seller is already on the platform – Lam Hong, a company that supplies marine and offshore equipment. Two other sellers are expected to get on board in November.
The combined supply from the three sellers will be enough to power 500 four-room public housing flats, he noted.
With such a platform, it could make economic sense for owners of, say, a terrace house, to install solar panels for the trading opportunity and for their own use, although the investment would take years to recoup.
Chong told The Business Times that the upfront costs to install solar panels for a terrace house would be about S$20,000 for the panels, and another S$1,400 for a smart meter. And that smart meter, which can be sourced only through state-owned electricity and gas distribution company SP, comes with a recurring S$20 monthly cost.
The solar panels on a roof of a terrace house should be able to support an output of 10 kilowatt-peak to 20 kilowatt-peak. At this output level, property owners typically yield a solar energy surplus of 10 per cent to 15 per cent, he noted.
Chong said the platform aims to address a gap in the market. Owners of large properties could enter into a long-term solar power purchase agreement (PPA), under which a buyer off-takes the solar power output over a period of 15 years to 20 years, thus granting a certainty of revenue.
Smaller players do not have this option, he pointed out. “A lot of projects don’t go through because they can’t get such a PPA arrangement, or they’re too small to get such an arrangement. This sometimes discourages an investor from even putting forth the solar assets to begin with. It’s what SolarShare is trying to solve.”
He added: “Instead of going through a long-term PPA with a single buyer or two buyers, now I have a ready pool of buyers who are always ready to buy your product, and they have even indicated the price that they are willing to pay.”
The platform is designed so that a buyer places a bid and is matched with a seller, if the bid is higher than the asking price. The matched buyer-and-seller pair then meet in the middle if there is a difference in the bid and asking prices. A buyer who offers to pay 30 cents/kWh may end up paying 27.5 cents/kWh when he is matched with a seller offering electricity at 25 cents/kWh.
However, Chong highlighted a risk to selling on the platform on a solely-for-profit basis. This is because a seller has to contend with the volatility inherent in the electricity market. In a supply glut, prices had hovered around 9 cents to 10 cents; with the current supply shortage, prices have recovered to around 25 cents, he pointed out.
“For asset investors, what we understand is that in order for you to get a reasonable return-on-investment, you will need to at least charge roughly 10 to 12 cents/kWh consistently for your solar investment to make sense. The problem is that in today’s arrangement, you have a volatile pool price. This is where you have no certainty in your recovery of that 10 to 12 cents/kWh,” he said.
If the owner intends to install the solar panels mainly for internal use, and to support the green cause, “I guess some of these financial considerations might not be too key for them”, he added.