Smart Export Guarantee explained
By Sarah Ingrams
What is the Smart Export Guarantee and how much money could you earn from this new payment for renewable electricity? We answer your key questions about SEG tariffs for homes with solar panels, wind turbines and more
The Smart Export Guarantee (SEG) replaces the government Feed-in Tariff (FIT) scheme that pays many solar panel owners for the electricity they generate at home. Find out if you can get an SEG tariff for your home's renewable energy system, and how much you could earn.
Click on the questions below to jump straight to the answer.
- What is the Smart Export Guarantee?
- How much could I earn from solar panels and the Smart Export Guarantee?
- Which companies have Smart Export Guarantee tariffs?
- Types of Smart Export Guarantee tariff
- Can I get a Smart Export Guarantee tariff?
- What is the difference between the Smart Export Guarantee and feed-in tariff?
- I already get the feed-in tariff. Should I change to SEG?
The Smart Export Guarantee pays households for the excess renewable electricity they generate but don’t use themselves. The electricity can be produced by renewable technologies including solar panels and wind turbines.
The government says that homes putting excess renewable electricity into the grid will be guaranteed payment for it under the new scheme. Since the closure of the Feed-in Tariff, those installing renewable technology could be exporting excess electricity to the National Grid for free.
All companies with more than 150,000 customers will have to offer an SEG by the end of 2019, but smaller companies can choose to do so too. It’s expected that other companies besides traditional energy suppliers will offer tariffs as well, so you should have a choice by the end of the year.
Find out whether solar panels would be right for your home.
Installing renewable generation technology and signing up to an SEG tariff will help you use more renewable electricity and should help you save money on it in the long term. However, it’s unlikely that you’ll be able to make money from the SEG to the extent that some solar panel owners initially could from the FIT.
This is because the SEG pays only for excess electricity put into the grid, rather than all the electricity that's generated.
Companies set their own SEG tariff prices, so you’ll need to shop around to make sure you get a price you’re happy with. Companies must pay more than zero, but it’s likely that there will be a range of prices and will work similarly to the up-and-down nature of gas and electricity rates.
Smart Export Guarantee vs Feed-in Tariff earnings
The above is based on a 4kWp system generating 3,410kWh in a year with half of this being exported (and therefore earning from the SEG) and half being used by the household (and therefore saving on the electricity bill). We used an electricity price of 14.33p/kWh and a single-rate SEG.
This is an illustration only. Actual bill savings and SEG earnings will depend on:
- how much electricity you export to the grid
- export tariff rates
- time of export (if the SEG has a variable rate)
- how much of the electricity you use yourself
- the price you pay for electricity.
So if you’re considering installing renewable generation, take these into account against the cost of installing the system and maintenance costs to work out how long it’ll take your system to pay for itself.
Find out more about solar PV maintenance.
If you fit a home battery, you’ll be able to store and use more of the electricity you have generated, and even export it at times when rates are higher. So you’ll save more on your electricity bill, and potentially earn from a SEG tariff. But you’ll also need to take into account the initial cost of the battery.
Read more about solar panels and energy storage.
So far, just Octopus Energy has a SEG tariff widely available. Bulb is running a trial and Eon is offering payments similar to the FIT to customers who buy solar panels from it.
Octopus Energy’s Outgoing Octopus tariffs require you to have a Secure first-generation smart meter or a second-generation smart meter so that it can measure and pay for what you export. If you don’t have one, Octopus will install one.
Bulb’s export payments trial began in March 2019 and it pays customers for electricity they export to the grid. It’s not open to all customers yet while Bulb works to overcome challenges.
We’ll be keeping an eye out as other SEG tariffs are launched.
The Solar Trade Association has a comparison table of currently available SEG tariffs so you can compare rates and whether they’re compatible with battery storage.
So far, we’ve seen two types of Smart Export Guarantee tariffs:
- fixed rate
- flexible rate.
Fixed rate SEGs have a set amount that they pay per kilowatt hour of electricity you export to the grid, regardless of the time you export it.
Flexible rate SEGs pay varying amounts depending on how valuable the electricity is to the system at different times. For example, the rates may be tied to day-ahead wholesale prices. So you could be paid more for exporting electricity at a time when there is a high demand for it (in the evening, for instance).
Companies might also offer multi-rate SEGs where there are different set rates for electricity exported at different times, such as day and night rates, or weekday and weekend rates.
The price you are paid must not be below zero at any time.
If you install solar panels, a wind turbine, or other renewable generation at home in future, you should be able to sign-up to a SEG tariff.
You’ll need to meet certain criteria though, including the following:
- Your installation must be 5MW capacity or less.
- You’ll need a meter that can provide half-hourly readings for electricity export.
- Your installation must be MCS-certified.
In practice, to provide half-hourly meter readings it's likely that you will need a smart meter. Although the government told us that it’s ‘still possible to enjoy the benefits of SEG without a smart meter’, you’ll need more than a traditional electricity meter because these cannot take half-hourly readings. Some advanced meters can do this or ‘any other type of export meter’, according to the government – but you’ll need to get one of these installed.
Find out more: what you need to know about smart meters.
But we’ve heard from Which? members who have been refused smart meters because of their solar panels. So make sure that you get a second-generation smart meter that can take export meter readings if you’re considering installing renewable technology.
MCS certification involves choosing a product and using an installer that are approved by the microgeneration certification scheme (MCS). This is a quality-assurance scheme for renewable technologies, meaning that companies and product meet high standards. Find out more about the MCS here.
If you have installed solar panels or another renewable system since the FIT closed, you should be able to sign up with a supplier offering SEG payments as long as you meet the criteria. You won’t be able to claim back-payments before you signed up to an SEG tariff.
The FIT paid households that produced their own electricity using renewable technologies. It closed to new applicants at the end of March 2019.
If you receive the FIT, you get two payments:
The SEG is one payment and is just for the electricity you export to the grid.
SEG payments will be based on the measured amount of electricity exported to the grid. FIT payments were ‘deemed’ or estimated to be 50% of the total electricity generated.
The payment rates for the FIT were set by Ofgem and the government and were the same regardless of which supplier paid you. SEG tariff rates will be set by the companies which offer them.
The FIT was paid for by a levy on all customers’ energy bills. The SEG is paid by energy companies who buy the power.
If you're already signed up to receive FIT payments, you will continue to do so for the remainder of your contract (usually around 20 years). The SEG is aimed at new renewable technology owners.
The FIT rates were very generous when the scheme first launched so it’s unlikely that you will earn as much from a SEG tariff compared with your feed-in tariff, although it’s difficult to say while there are so few SEG tariffs available.
SEG tariffs will pay you only for the exact amount of electricity you export, whereas feed-in tariffs estimated your export at 50% of what your system generated – meaning that if you used more than 50% of your electricity then you’d be even better off.