✔ The Smart Export Guarantee launched on 1st January 2020, replacing the Feed-in Tariff
✔ Some energy providers are offering around 5.5p/kWh of exported electricity
✔ A 4kWp solar panel system could make around £340 per year
Homeowners with solar panels can start making money again.
As of 1st January 2020, large energy suppliers in the UK are obliged to pay households for the renewable energy they export to the National Grid. This is under the Smart Export Guarantee (SEG) scheme, set up to replace the Feed-in Tariff.
On this page, we’ll tell you how the SEG works, whether you’re eligible for it, and how much you could earn.
What's on this page?
What is the Smart Export Guarantee?
The SEG is a UK government initiative designed to replace the now-defunct Feed-in Tariff, which concluded on 31st March 2019.
Starting from 1st January 2020, the initiative requires all large energy companies (i.e. suppliers with at least 150,000 customers) to pay households for any solar-generated electricity they send back to the National Grid.
This also applies to other forms of ‘small-scale, low carbon energy’, such as wind and hydro, but our focus for now is entirely on solar power.
The exact rate varies depending on the supplier, as all the government demands is that it be ‘more than zero’. We go into detail about the current rates further down the page.
What is the difference between the SEG and the FiT?
In terms of government-led solar power initiatives, the SEG is certainly the FiT’s successor, but they are not the same.
The Feed-in Tariff was paid out by the government, while the SEG is paid out by suppliers. Homeowners with solar panels used to receive two payments: a generation tariff (for the total amount of renewable electricity they generated), and a further export tariff (for the renewable electricity they exported back to the grid).
By contrast, the SEG is just one payment, replacing the old export tariff and rewarding homeowners for the renewable electricity they send back to the grid.
However, instead of a fixed rate being set by the government, it is instead set by the suppliers themselves. Companies are free to set whatever rate they want, so long as it’s more than zero.
The FiT’s export tariff (before its conclusion in March 2019) was 5.24 pence for every kilowatt hour (kWh) of renewable electricity sent to the grid. Given that the generation tariff is not being replaced, we’d hope at the very least for companies’ SEG rates to match the old export tariff.
Fortunately, a handful of energy suppliers have started offering SEG tariffs that exceed 5.24p/kWh, which is very good news.
What will happen to future FiT payments?
If you already started receiving FiT payments before the scheme finished in March 2019, you will continue to receive payments for the duration of your contract (usually 20 years).
The SEG only applies to people who installed their solar panels after 31st March 2019.
Do you need a smart meter to receive SEG payments?
To start receiving accurate SEG payments, it’s likely you will need a smart meter installed.
When the government used to pay out its export tariff, it would never measure exactly how much electricity a household was exporting back to the grid. Instead, it assumed that the typical household exported around 50% of the electricity it generated, so merely paid each household based on this average.
This meant households that were exporting more than 50% of their renewable electricity back to the grid were not being paid properly. And this was probably the case for a significant number of households, given how many homes are unoccupied during the day (i.e. during peak solar energy generation time).
However, with the SEG, the government wants suppliers to pay households fairly – and this requires accurate information. The answer is a smart meter, which can make a recording of your electricity exports on a half-hourly basis. The smart meter will communicate directly with the energy supplier, enabling them to pay exactly what they owe.
Fortunately, the UK government is currently carrying out a nationwide rollout of smart meters. It was previously the case that the SMETS1 smart meter was incompatible with solar panels, but the second-generation SMETS2 is compatible, and any UK household is entitled to a free upgrade before 31st December 2020.
For more information, check out our detailed guide to smart meters and solar panels.
Types of SEG
Under the SEG, you could be paid by suppliers in two different ways: a fixed rate or a flexible rate.
A fixed rate SEG is a set amount of money for each kWh of renewable electricity you export to the grid, irrespective of the time of day.
A flexible rate SEG pays different amounts of money for renewable electricity depending on the time of day. For example, you might be paid more for the electricity you export in the evening (when there is higher demand), and be paid less in the morning.
In the long term, the Department for Business, Energy & Industrial Strategy (BEIS) would like all fixed rate tariffs to be replaced by flexible rate tariffs, which rise and fall every half hour (based on wholesale electricity market prices).
Are you eligible?
Here are the key requirements for any household looking to receive SEG payments:
- Located in the UK
- Generating renewable energy at home via solar PV, wind, hydro, micro combined heat and power (CHP), or anaerobic digestion (AD) – with a maximum capacity of 5 megawatts (MW)
- MCS-certified installation
As mentioned above, a smart meter is not essential, but it’s important if you want to be paid accurately for the energy you’re exporting (and it may soon become a key requirement).
If you’re not yet generating solar power at home, we can help you make the next step. Simply pop your details into this quick form, and our professional installers will be in touch with prices.
What are the current SEG tariffs?
All we knew before 2020 was that the SEG tariffs had to be ‘above zero’, which wasn’t much to go on.
We now know what suppliers are offering households, and some of the rates are fairly reasonable. The Solar Trade Association has been saying that a price somewhere between 5p and 6p per kWh would be fair, and this is exactly what certain suppliers are offering.
Check out the graph and the table below to see the full rundown of top energy suppliers and their SEG rates.
|Energy supplier||Price||Name of tariff|
|Social Energy||5.6p/kWh||Smarter Export|
|Octopus Energy||5.5p/kWh||Outgoing Fixed|
|E.On (for new customers with solar PV from 1st January 2020)||5.5p/kWh||Fix & Export Exclusive|
|OVO||4p/kWh||OVO SEG Tariff|
|ScottishPower||4p/kWh||Smart Export Variable Tariff|
|SSE||3.5p/kWh||Smart Export Tariff|
|Shell Energy||3.5p/kWh||SEG V1 Tariff|
|E.On (for all other customers)||3p/kWh||Fix & Export|
|Utilita||3p/kWh||Utilita Smart Export Guarantee|
|British Gas||1.5p/kWh||Export & Earn Flex|
|Green Network Energy||1p/kWh||SEG Tariff|
|Utility Warehouse||0.5p/kWh||UW Smart Export Guarantee|
As you can see, Social Energy is offering the best rate, coughing up 5.6p for every kWh of renewable electricity a household sends back to the grid. Surprisingly, this is actually 0.36p more than the government’s 2019 export tariff rate.
Octopus Energy, Bulb, and E.On (for certain customers) are also offering very competitive rates. Meanwhile, down at the bottom, Utility Warehouse are paying out a measly 0.5p/kWh.
On 1st January 2020 when the SEG first launched, Shell Energy in fact placed last, with a rate of just 0.001p/kWh. However, pressure from climate activists such as Greenpeace persuaded the company to shell out, and by the 3rd of January the rate had been increased to 3.5p/kWh.
It’s important to note that you aren’t obliged to sell your exported renewable electricity to your energy supplier.
By law, all SEG licensees must offer a tariff to every eligible household, irrespective of whether that household is a customer. (Of course, suppliers are entitled to offer a more favourable rate to customers).
How much could you earn?
According to calculations by the Energy Saving Trust (EST) last year, a household with a 4kWp solar panel system, a grid electricity price of 14.33p/kWh, and Octopus Energy’s SEG rate of 5.5p/kWh could make £338 per year.
In this example, the EST is assuming that the 4kWp system generates 3,410kWh of electricity in a year, and that the house exports half of this back to the grid.
So, this figure of £338 comprises £244 of energy bill savings, and £94 of export earnings.
Of course, this is just an estimate, and your own earnings through the SEG will depend on multiple variables. These include:
- how much electricity your solar panels can generate
- how much electricity you send to the grid
- how much you pay for grid electricity
- what SEG rate you receive.
Does the SEG work with solar batteries?
If you own a solar-plus-storage system at home, you might be wondering whether it’s compatible with the SEG.
There is currently no one-size-fits-all rule for solar batteries when it comes to SEG payments. Certain energy companies (such as Bulb, Octopus, and British Gas) will accept solar energy exported from a battery,but some of them (such as Social Energy) might insist that you use one of their own batteries.
There are several energy companies that don’t clarify online as to whether they accept exported electricity from a solar battery, so if you’re unsure, your best bet is to contact the company directly.
The Smart Export Guarantee: summarised
Here’s a quick summary of the Smart Export Guarantee:
- It launched on 1st January 2020, replacing the FiT’s export tariff
- It requires all large, UK-based energy suppliers to pay households for every kWh of renewable electricity they export back to the grid
- Suppliers are free to determine their own market rate, as long as it’s always more than zero
- The STA believes that 5-6p per kWh is a fair rate
- Social Energy is currently offering the highest rate, at 5.6p/kWh
- Most SEG tariffs are currently fixed, but we expect most suppliers to switch to flexible tariffs over time
- A smart meter is not essential, but it is if households want to be paid accurately and fairly for their exported energy
- Solar batteries are compatible with SEG schemes from certain providers, including Social Energy, Octopus Energy, and Bulb
If you’d like to start benefitting from the Smart Export Guarantee, it’s about time you switched to solar. Simply fill in this form with a few details, and our trusted suppliers will contact you with solar panel quotes.