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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.

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The Smart Export Guarantee (SEG) pays customers for renewable electricity they have generated and put into the grid. Big energy companies had to participate from the beginning of 2020 and it replaces the Feed-in Tariff (FIT) scheme which 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? 

The Smart Export Guarantee pays households for the excess renewable electricity they generate but don’t use themselves. The electricity can be produced by the following renewable technologies:

  • solar panels (pv)
  • wind
  • hydro
  • micro combined heat and power
  • anaerobic digestion

The government said that homes putting excess renewable electricity into the grid are guaranteed payment for it under the new scheme. But you have to sign up to a SEG tariff with a company, otherwise you won’t get paid for your electricity and will export any you generate but don’t use to the National Grid for free.

Find out whether solar panels would be right for your home.

How much could I earn with solar panels and the Smart Export Guarantee? 

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 we found companies paying between 0.5p/kWh and 5.5p/kWh when we checked in January 2020.

This means a 10-fold difference in your payments, which would add up over a year if you export a lot of electricity to the grid.

The figures above are an illustration only, based on a 4kWp system exporting 1,500kWh of electricity to the grid in a year. For context, the average household uses 3,100kWh electricity over a year.

On top of this, you would expect to save money on your electricity bill as you’d be using renewable power generated at home and therefore buying less from the grid.

These figures are illustrative only. Actual bill savings and SEG earnings will depend on:

  • how much electricity you export to the grid
  • your export tariff rates
  • time of export (if the SEG has a time-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, helping you save more on your electricity bill. However, different tariffs have different rules around whether they’ll pay for electricity stored in a battery, especially if some of it could be ‘brown’ electricity from the grid.

Check what your chosen SEG company’s rules are. If they’ll pay for stored electricity then you could earn more with a flexible tariff by storing electricity to export at times when rates are higher. But you’ll also need to take into account the initial cost of the battery.

Read more about solar panels and energy storage.

Which companies have Smart Export Guarantee tariffs? 

All companies with more than 150,000 customers have to offer a SEG tariff. Smaller companies can choose to do so and it's expected that other companies besides traditional energy companies will offer tariffs as well, so look out for different options available.

Some firms, including Bulb, Eon and Octopus Energy begun offering tariffs in 2019.

Companies which have to offer SEG tariffs must make them available to all eligible installations, not just those of their customers, according to energy regulator Ofgem. So you can choose a different supplier to sell your renewable electricity to, to the one that you buy electricity from.

However some firms will pay for your exports into your account with them, if you are a customer, which might be convenient.

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.

You can also check our round-up of SEG tariffs available from big energy companies in January 2020, including how often you get paid.

Types of Smart Export Guarantee tariff 

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. Most of the SEG tariffs on offer at the moment follow this pattern.

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). Octopus Energy’s Outgoing Agile tariff is this type.

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.

To complicate things, some companies are offering tariffs where the price (per kWh of electricity) is fixed for the duration of the contract, while others are offering variable rates. A variable rate means that they can change the price of the tariff depending on whether they want to pay more or less for your electricity. You should be given 30 days’ notice though.

Can I get a Smart Export Guarantee tariff? 

If you install solar panels, a wind turbine, or other renewable generation at home, 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 (50kW for micro-CHP).
  • 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 though.

What is the difference between the Smart Export Guarantee and feed-in 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 are 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 are 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.

I already get the FIT. Should I change to SEG? 

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 more 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 switching to a SEG tariff compared with your feed-in tariff.

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.

However, if you opt-out of receiving your FIT export payments, you can sign up to get SEG export payments instead. 

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