Every Electron Has a Cost Price

• 4.7c4.7cbattery wear per kWh discharged
• 90%of energy kept on the round trip

Three identical kilowatt-hours left my house last summer. One cost me nothing, one cost me about five cents, and one cost me more than I sold it for. Same electrons, same wire, three very different receipts.

The grid couldn’t tell them apart, and neither could the meter. The whole difference sat on the cost side: what each kilowatt-hour cost this house to supply. That decides whether an export price, the rate a plan pays for energy sent to the grid, makes the house money or loses it. The same price can do either, depending on what’s being sold.

The last post built the fair evidence. It ended on a warning: knowing what you could sell means nothing until you know what it cost you to make. This post is the making cost.

A shopkeeper never celebrates a sale price without checking it against the cost price. The gap between the two is the whole business. Solar households skip the check constantly. We cheer a healthy feed-in price without asking what the kilowatt-hour being sold cost to put on the wire. That depends entirely on the route the energy took, and from this house there are three routes, stacked into a ladder.

Rung one: straight off the roof

Sunshine hits the panels, the house takes what it needs, and the surplus flows straight to the grid in the same moment.

That surplus costs essentially nothing to supply. The panels cost the same to own whether their output is sold, used or wasted, and the sunshine arrives free. Once the array is on the roof, the next kilowatt-hour of direct export is like the next photograph from a paid-for camera: the gear cost plenty, the extra click costs nothing.

So every cent of the export price is kept. Sell for ten cents, keep ten; sell for two, keep two. Any price above zero beats letting the sunshine go unharvested, which is why the first post was about prices below zero, the only territory where selling free sunshine stops making sense. That was the first of my three kilowatt-hours: cost price nothing, sale price all margin. If every export worked like that, this post could end here.

Rung two: through the battery

The surplus goes into the battery instead and comes back out in the evening, when the house would otherwise be buying.

The lazy assumption, which I held for longer than I’d like to admit, is that the battery is a free pipe with a delay in it. It isn’t. A battery is a consumable, and every charge and discharge uses up a slice of its finite working life, the way every kilometre uses up a slice of a set of tyres. Nobody invoices you per trip for tyres; the bill simply arrives early or late depending on how you drove. Batteries are the same. The using-up is called battery wear, and it has a price.

For this system it works out at about 4.7 cents for every kilowatt-hour the battery discharges. That’s the “about five cents” from the opening. It’s a number this household measured on its own equipment, and the next post shows how.

The toll is brutal in its smallness. The same sunshine, taking the scenic route through the battery, now carries a real cost of supply, and an export price has to clear 4.7 cents before the first cent of margin appears. Sell that kilowatt-hour for ten cents and you keep around five, half of what rung one kept from the identical sale. Sell it for four and you’ve paid for the privilege of wearing out your own battery.

Rung three: bought, stored, sold back

The battery fills from the grid at whatever the buying price was that hour, and sells back later at, you hope, a higher one. This is the only rung where the energy arrives with a purchase price attached, and it’s where my third kilowatt-hour came from.

Two costs stack. The first is the same wear toll, about 4.7 cents per discharged kilowatt-hour, whether the energy came from the roof or the grid. The second is the purchase price, which is larger than it looks, because batteries don’t hand back everything you put in.

Storing and retrieving electricity loses some of it, mostly as heat. For this system the round trip keeps about 90 per cent, also measured at home. In money terms: put ten kilowatt-hours in and about nine come out to sell. Whatever you paid for the ten, the nine must recover.

With deliberately round, made-up numbers: buy ten kilowatt-hours at 18 cents each, $1.80 all told. Nine come back out, so each carries 20 cents of purchase cost before it has earned a thing. Add the wear toll and each costs roughly 25 cents to put on the wire. Sell at anything less and the strategy that felt like trading is a small, well-organised donation. My third kilowatt-hour went out on terms like those, sold for less than it cost to supply, by an owner who hadn’t yet done this arithmetic.

The ten-cent test

Suppose a plan offers an export price of ten cents, a made-up price chosen so the arithmetic can be done while the kettle boils. Is ten cents good? The ladder says that’s the wrong question. Good for which electron?

For rung-one energy, all ten cents is margin.

For rung-two energy, ten cents still pencils, but the celebration halves: 4.7 cents goes to the wear the sale itself caused, leaving around five. Below about five cents it stops pencilling altogether.

For rung-three energy, at the made-up prices above, each kilowatt-hour cost roughly 25 cents to supply and earns ten, a loss of about 15 cents per unit, booked faithfully every time the strategy runs.

The prices were invented. The only figures with a household pedigree are the 4.7-cent toll and the ten-in-nine-out round trip. The point is the shape: one sale price lands as a clear win, a modest win and a guaranteed loss, depending on where the kilowatt-hour came from.

The trap on rungs two and three

Most battery-export intuitions assume rung-one costs while operating on rungs two or three. A high price flashes up, the battery is sitting full, and the brain, mine included, says free money in the box, sell it. But the energy in the box is never free. It arrived carrying the wear toll, or the wear toll plus an inflated purchase price, and the moment of sale is when that history is easiest to forget. The meter doesn’t record where its energy came from. It just counts what leaves, so your ledger has to remember what the meter can’t.

Every comparison still to come only works once each exported kilowatt-hour is priced by the route it travelled.

Diagram to come

Which electron am I selling?

If this post earns one permanent spot in your head, make it the question: which electron am I selling? It travels to any plan, any battery, any year.

Straight off the roof: essentially free, so nearly any positive price is worth taking. Through the battery from the roof: the wear toll, about five cents here. Your battery will differ, but it is not zero. Bought, stored and sold back: wear plus a purchase price inflated by the round trip, the rung where it is easiest to lose money in good faith.

“Essentially free” on rung one is running-cost talk. The array itself cost real money, and that belongs to the earlier decision of whether to buy a system at all. This series is about operating the one you already own.

The two numbers doing the real work, the 4.7-cent toll and the ten-in-nine-out round trip, have been claimed but not yet earned. A cost that never sends an invoice deserves better than to be taken on trust, even from me. Next time: the kitchen-table measurement that caught it.

So: next time an export price catches your eye, don’t ask whether it’s a good price. Ask which electron you’d be selling.

The spreadsheet doesn’t care what you hoped the answer was.