Ofgem have confirmed that the Smart Export Guarantee (SEG) will be introduced from 1st January 2020 as a replacement to the Feed-in Tariff.
The scheme will see energy suppliers pay domestic solar panel owners for each unit of electricity sent to the National Grid.
How will the Smart Export Guarantee work?
Once the SEG has been introduced, UK energy suppliers with more than 150,000 customers will have a legal obligation to pay any customers for each unit of electricity generated by their solar panels. Any energy suppliers with fewer than 150,000 customers can take part in the scheme but have no-obligation to do so.
In terms of the solar PV system itself, it must be a domestic installation of 5MW or below.
What was the Feed-in Tariff?
In April 2010, the FiT was introduced as an incentive to encourage more homeowners across the UK to invest in a solar PV system. The Feed-in Tariff was split into 2 parts:
- Generation tariff: Energy being generated by the solar panels.
- Export tariff: Unused energy that was exported to the National Grid
The payments were based on national tariffs which were re-evaluated every 3 months which, more often than not, saw the amount homeowners would receive reduced. When the scheme was first introduced, the rate stood at 43.3p per kWh but by the time of its closure was only at 3.79p per kWh.
The Feed-in Tariff was then closed to new applicants on 31st March 2019. Initially, there was no indication that a replacement scheme would be introduced but on 10th June 2019 the government confirmed the Smart Export Guarantee would begin from 1st January 2020.
What’s the difference between the FiT and the Smart Export Guarantee?
We’re still waiting for comprehensive details of the Smart Export Guarantee but based on the information available, it’s likely to work very different to the Feed-in Tariff.
- Energy suppliers will be able to set their own tariffs
- Homeowners must have a smart meter
- Payments will only be made for exported energy
- Solar panel systems with a solar battery will be eligible
One thing that the 2 schemes do have in common is that the solar panel system must be accredited by the Microgeneration Certification Scheme (MCS).
Potential earnings through the Smart Export Guarantee
Energy suppliers are yet to announce the rates they will pay customers for generating their own renewable energy using solar panels. There are, however, a couple of variables we can be certain of at the moment:
- Energy suppliers each being able to offer their own rates
- Payback will depend on how much unused energy is sent to the National Grid
Speaking about the Smart Export Guarantee, Chris Skidmore, the government’s stand-in energy minister said: “We want the energy market to innovate and it’s encouraging to see some suppliers already offering competitive export tariffs to reduce bills. We want more to follow suit, encouraging small-scale generation without adding to consumer bills, as we move towards a subsidy-free energy system and a net zero emissions economy.”
The Solar Trade Association (STA) also commented on the scheme: “We believe the Government should protect solar households by ensuring a fair minimum floor price so you cannot be exploited. In our view a fair average price is between 5p and 6p/kWh, though we recognise that power will be worth more or less than that at different times of the day and night.”
Energy suppliers Octopus, Bulb and E.On already offer export tariffs to some of their customers:
- Octopus offer a fixed rate of 5.5p per kWh (or a variable rate tied to the wholesale price).
- Bulb are running a trial to pay 50 of their customers with smart meters for any electricity being exported to the National Grid.
- E.On are paying the first 500 new solar customers a rate of 5.24p per kWh for the first year through their Solar Reward scheme.
Ofgem are expected to provide energy suppliers with guidance as to how much they should consider offering customers in the lead-up to the SEG rolling out.
Can I apply if I receive FiT payments?
The Smart Export Guarantee is only open to new adopters of solar PV panels so if you’re still receiving FiT payment you can’t also benefit from this scheme too.
Will my FiT payments be affected?
The introduction of the Smart Export Guarantee will have no impact on any homeowners still receiving Feed-in Tariff payments. You will still receive those payments for the full 20 year period (or 25 years in a few cases).
Should I wait until 2020 to install solar panels?
If you’re looking to install a solar PV system, you don’t need to wait until the Smart Export Guarantee is live to be eligible for the scheme.
- Reduce your reliance on your energy supplier which will in turn help to cut your energy bills
- Benefit from solar panels being at their cheapest price since 2010 with systems available for £6,000 – £7,000
- Lower the carbon footprint of your home by powering appliances with renewable solar energy
- Potential to increase the value of your property
Plus, if you go ahead with the solar panel installation ahead of the Smart Export Guarantee rolling out, you’ll be able to apply and benefit from those payments much sooner.
Free solar panel installation quotes
When beginning your search for a qualified solar panel installer, we highly recommend comparing multiple quotes. This way, you can be confident that you’re getting the very best price for solar panel installations in your local area.
At Solar Guide, finding multiple quotes has never been easier. Simply complete an online form – providing details of the installation – and you’ll soon get free quotes from up to 3 fully-qualified MCS installers.