Dan here - I’m the co-CEO at Amber.
You might have seen that Texas has been doing it tough recently.
This February, a major winter storm put the Texan energy market under severe pressure.
Fossil-fuel and renewable generators alike iced over and broke down. Millions of people struggled to stay warm amid rolling blackouts.
Lives, and livelihoods have been lost. It’s a tragic situation.
Massive disruptions to supply coupled with huge peaks in demand caused the energy market to hit boiling point, resulting in approximately 100 hours of price spikes at the market cap of AU$11.60/kWh.
Many energy retailers in Texas are now facing bankruptcy. Unfortunately, it’s Texan energy consumers who will end up footing the bill for these wild prices over the longer-term.
One retailer which has been featured in the headlines is Griddy, who gave Texans direct access to wholesale energy prices.
Griddy’s customers were exposed to these marathon price spikes, and with no protections or price guarantees in place, some of Griddy’s customers have ended up with staggeringly high energy bills. Griddy has since shut down.
At times, Amber has been mentioned alongside Griddy in coverage of the situation in Texas.
We want to be totally transparent on this issue. Although we both offer residential energy at wholesale prices, there are a couple of major differences between Griddy and Amber.
Even in the case of a prolonged, extreme weather event, Australia—and Amber—has strong protections in place to keep Aussie households safe from runaway energy bills.
You see… Texas’ energy market is different to ours in a few key ways.
In Australia, the energy market has a circuit-breaker that automatically comes into effect in these kinds of extreme situations.
If a similar extreme situation happened here, the Australian Energy Market Operator (AEMO) would automatically trigger what’s called an Administered Price Period (APP).
The APP slashes energy prices when they’ve been too high for too long.
A situation like what happened in Texas, where the market experienced ~100 hours of price spikes at AU$11.60/kWh, is impossible because of the APP.
In Australia, only 7.5 hours of maximum prices ($15/kWh) are permitted in a seven day period before the market price is automatically reduced down to $0.3/kWh for the rest of the week.
The APP means that the total cost of energy during a similar extreme weather event would have been capped at <10% of what Texas has experienced.
We normally wouldn’t expect to hit 7.5 hours of market cap price spikes over the course of an entire year in Australia, let alone in a single week. Price spikes are rare, and the APP is even rarer.
But we’re glad it’s there if we need it.
There’s a second big reason why what happened with Griddy couldn’t happen with us.
At Amber, we guarantee that our customers won’t pay more than the government’s reference price for energy, the DMO, over a 12 month period. In reality, most of our customers save bunches compared to the DMO.
We can offer this guarantee because we buy financial hedges as insurance against prolonged price spikes.
Protection against unexpected events in the wholesale market is baked into our business model.
No Amber customer will ever see an energy bill like what Griddy customers have experienced in Texas.
And over the course of a year, no Amber customer will ever pay more than the government reference price for power.
We give customers access to the benefits of cheaper wholesale prices, and the power to shift their usage to peak renewable times, while protecting them from the risk of extended price spikes.
That’s why doing wholesale the Amber way is safer for customers.
And it’s the fastest, and best, path to getting Australia to 100% renewables.
If you’ve got any questions, or have concerns I haven’t covered here, please don’t hesitate to reach out.
Co-founder & Co-CEO