Energy Arbitrage explained
Energy arbitrage (or price arbitrage) is the strategy of charging a battery when electricity is cheap and discharging it when electricity is expensive — capturing the price difference as savings or income.
With a time-of-use tariff like Octopus Agile, electricity prices vary dramatically throughout the day. Charging your battery at 3 am at 7p/kWh and using that stored electricity during the 5–7 pm peak at 35p/kWh delivers a saving of 28p per kWh cycled through the battery (minus round-trip efficiency losses of ~10%).
For a 10 kWh battery arbitraging a 28p/kWh spread daily:
- Daily saving: 10 × 0.28 × 0.9 (efficiency) = £2.52/day
- Annual saving (if done daily): ~£920/year
In practice, the spread is lower on average and not every day offers arbitrage opportunity, but real-world Octopus Agile + battery users regularly report savings of £500–£1,200/year from arbitrage alone — on top of solar self-consumption savings.
To implement energy arbitrage effectively, you need:
- A smart hybrid inverter or battery management system that can schedule charging times
- A time-of-use tariff with a meaningful peak-off-peak price difference
- Automation (most modern systems handle this automatically using day-ahead price forecasts)