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February 6, 2024

Smart Export Guarantee – Everything You Need To Know

Smart export guarantee

More than 1.3 million households in the UK are currently reaping the benefits of solar power – cutting energy costs, helping the environment, and adding value to their home. You can also earn money under the Smart Export Guarantee initiative by selling some of the solar energy you generate.

Discover everything you need to know about SEG and its role in the drive towards helping the UK reach its net zero target.

 

What Is the Smart Export Guarantee?

If your home generates its own electricity, at times there will be more than you can store or are able to use. This surplus goes back to the grid to be used by someone else. 

You can, however, get paid for this electricity through the government-backed Smart Export Guarantee (SEG). The scheme allows householders and businesses with a sustainable energy system like solar power to sell excess electricity they generate back to the national grid.

Launched in 2020 by the Department for Business, Energy and Industrial Strategy (BEIS), SEG replaced the Feed-in Tariff (FiT). This scheme was discontinued in March 2019 but those already in it continue to get payments.

The Smart Export Guarantee is run by Ofgem (the Office of Gas and Electricity Markets). Under the initiative, SEG-licensed electricity suppliers set their own tariffs for buying low-carbon electricity produced on a small scale. This means that homes and businesses generating renewable electricity can sell back to the grid what they don’t use.

 

Smart Export Guarantee Eligibility

Certain criteria need to be met to qualify for SEG payments.

Your renewable energy generation system must be officially certified.

You must have a smart meter or an export meter that gives half-hourly readings. If you don’t have one of these meters, you can ask for one from your supplier when signing up for a SEG tariff.

You can’t get a SEG tariff if you’re receiving export payments under the FiT scheme. 

The SEG initiative is specifically designed for five types of renewable energy generation:

  • Systems that generate energy from the sun, like solar PV (photovoltaic) panels.
  • Wind power installations such as wind turbines.
  • Hydropower generated from flowing water. 
  • Anaerobic digestion (AD), which breaks down organic matter and converts it into energy.
  • Micro combined heat and power (micro-CHP) systems that generate heat and electricity simultaneously from the same source.

 

SEG and Solar Photovoltaic Energy

Photovoltaic systems like solar panels capture the sun’s energy and convert it into electricity. There are no restrictions on types of solar photovoltaic systems that are eligible for SEG payments, provided they produce less than five megawatts (MW) of electricity – five million watts. 

But the system needs to be certified under the Microgeneration Certification Scheme (MCS). This is an independent programme that certifies renewable energy installers and products.

For solar PV systems producing less than 50 kilowatts (kW) – 50 thousand watts –you also need to show that the installer is certified. If you have MCS certification, this will qualify. If not, the installer and installation must have the relevant accreditation.

Solar panels in most homes produce far less than 50kW – typically 4kW, 5kW or 6kW.

 

Solar Batteries

Without solar battery storage, you can only use solar power during daylight. Solar batteries allow you to store energy to use at any time – during the evening when the sun has gone down, for instance.

Excess energy stored in solar batteries is known as brown electricity. Energy suppliers aren’t obliged to pay for brown electricity exported to the grid but may decide to do so.

 

SEG and Hydropower

Hydroelectricity generated from water flow is far less common than solar energy. It accounts for just over 2% of renewable energy generated in the UK.

This is mainly from large-scale installations – the UK is regarded as a global leader in hydropower technology. However, hydropower can be cost effective for properties in off-grid locations near a river or stream, especially in Wales or Scotland.

To qualify for a SEG tariff, hydropower systems have to meet the same criteria as solar photovoltaic energy, generating less than 5MW, with an installation certification.

 

SEG and Wind Power

Most wind power in the UK comes from large wind farms, and it’s the main source of green energy in the UK.  Wind power can also be generated by homes but the equipment may be more expensive than some other renewable energy options.

SEG payment eligibility for wind power has the same requirements as solar PV and hydropower systems.

 

SEG and Anaerobic Digestion

Anaerobic digestion breaks down organic material to produce biogas as renewable energy.This system is rare in homes but it can be ideal for farms because it uses microorganisms like bacteria to break down materials such as manure and food waste. 

The resulting natural gas – typically methane – isn’t emission free but it is a renewable energy source. To be eligible for a SEG tariff, the biogas must be produced from solid biomass from a sustainable source.

 

SEG and Micro-CHP

Micro combined heat and power technology that generates heat and electricity at the same time is popular with businesses. Micro-CHP systems such as reciprocating internal combustion engines aren’t always carbon free but they cut emissions and significantly lowers energy costs 

Micro combined heat and power systems are eligible for SEG payments if their capacity is 50kW or less. If they generate more, both installer and installation certificates will be needed.

 

Smart Export Guarantee Payments

Under the Smart Export Guarantee, you get paid for every unit of electricity you direct back to the grid.

To get a SEG tariff, you need to apply directly to one of the licensed SEG suppliers, who must offer SEG payments to all those eligible. SEG licensees determine contract length and how much money you’ll get. Most offer 12-month fixed contracts.

The SEG supplier doesn’t have to be your current top-up energy company. If you wish, you can have different organisations for electricity supply, gas supply, and SEG payments.

Different SEG suppliers may offer varying tariffs, which can change over time. And suppliers offering the best rates may not necessarily have the best energy package. So it’s worth shopping around and then reviewing your tariff options regularly.

Each licensee can set their own payment cycles, which may vary from every three months to once a year. 

You can still get SEG payments if you have had a government solar installation grant. The two initiatives are separate.

 

SEG Licensees

Energy suppliers with 150,000 or more domestic customers must offer a SEG tariff. Suppliers with fewer customers may make SEG payments voluntarily.

Licensees currently registered in the Smart Export Guarantee programme are listed by Ofgem as:

  • Octopus Energy.
  • E.ON.
  • British Gas.
  • Scottish Power.
  • EDF.
  • E (Gas & Electricity).
  • OVO Energy.
  • Rebel Energy.
  • Shell Energy.
  • Pozitive Energy.
  • So Energy.
  • Utilita.
  • The Utility Warehouse.

Octopus was the most popular SEG energy supplier in 2023, according to Ofgem. It also offered the widest range of tariffs.

 

How Much Money Can You Save with SEG?

The Smart Export Guarantee generates a small but constant stream of income, with electricity suppliers paying for each unit of power you feed back into the grid.

SEG payments typically save households more than £100 a year on energy costs, based on January 2024 fuel prices.

The Smart Export Guarantee payment process is simpler than that of the Feed-in Tariff system it replaced.

Payments start once your electricity supplier gets readings from your smart meter or export meter. They’re usually made with a bank transfer each month or every three months.

Combined with reduced energy costs, generating your own renewable energy could save upwards of £200 a year.

 

SEG Vs FiT

The Smart Export Guarantee doesn’t offer the same rewards as the Feed-in Tariff.

FiT included both export and generation tariffs. SEG payments are only for electricity exported back to the grid. So you get paid only for the renewable energy you don’t use.

SEG tariffs aren’t available if you’re getting FiT payments. You could switch from FiT to SEG but payments would be less in most cases.

 

SEG Tariffs

There are no set or minimum tariffs in the Smart Export Guarantee, and energy suppliers are left to decide their own rates. They may choose to offer multiple tariffs or just one.

SEG tariffs are fixed or variable. 

A fixed tariff pays a rate based on kilowatt hours (kWh) – the amount of energy delivered by one kilowatt of power in one hour. These payments vary among suppliers, from around 1p to 20p per kWh.

Variable rates fluctuate according to market demand.

 

Benefits of Solar Panels

Solar power currently accounts for 99.9% of systems registered with the Smart Export Guarantee scheme.

Solar panel installation benefits homeowners financially while playing an important role in reducing greenhouse gas emissions and mitigating climate change.

 

Environmental Benefits

Fossil fuels are the main cause of climate change, responsible for more than three-quarters of global greenhouse gas emissions and nearly 90% of carbon dioxide emissions.

Solar power is one of the cleanest sources of renewable energy currently available and helps the environment by reducing dependence on fossil fuels. Solar panels emit no greenhouse gases and leave a minimal carbon footprint.

The World Meteorological Organization (WMO) forecasts that global temperatures are likely to reach record levels by 2027.

 

Financial Benefits

Households with solar panels were cutting energy bills by up to 70% in 2023, according to the Energy Saving Trust. This means that over time solar panels provide a solid return on investment, with savings on energy bills equalling the cost of installation within five to 10 years for many homeowners.

Furthermore, solar panels may increase the value of your home. Various studies indicate that homes with solar panels tend to sell at premium prices.

And under the Smart Export Guarantee, you can make money by selling excess solar energy back to the grid.

 

Solar Panel Costs

Solar power costs dropped 87% from 2013 to 2023, driving it towards a level that could make fossil fuels obsolete, according to scientific think tank Mercator Research Institute on Global Commons and Climate Change.

The cost of solar panel installation ranges from around £2,350 for three panels for a one-bedroom home to £11,000 for 14 panels for a four-bed house.

Energy experts estimate that solar power will account for up to one-fifth of UK electricity generation by 2030.

Other research suggests solar technology and other renewables could cost effectively replace fossil fuels and meet global energy requirements by 2050 – the target year for net zero carbon emissions. 

 

What Is Net Zero?

Net zero is the global initiative to minimise greenhouse gases as much as possible, with any remaining emissions reabsorbed by natural resources such as forests and oceans.

Governments, businesses and other organisations across the world are spearheading the drive towards net zero by 2050 in accordance with the Paris Agreement on climate change.

The target is to limit global warming by ensuring carbon dioxide released into the atmosphere doesn’t exceed the amount taken away.

 

Net Zero and the Energy Sector

The energy sector plays a key role in the net zero programme. It currently accounts for 75% of greenhouse gas emissions through burning fossil fuels to generate energy.

Fossil fuels such as coal, natural gas, and oil pollute the environment and are non-renewable energy sources that will eventually run out. As they become scarcer, they’re also likely to become increasingly expensive.

Renewable energy sources such as solar power, on the other hand, are infinite and reduce carbon emissions.

 

Effective Home Solar Panels

As the fastest-growing renewable energy solution, solar power helps protect the planet. It combats global warming by lowering levels of carbon dioxide pollutants and other greenhouse gases released into the atmosphere.

Solar panels also save households hundreds of pounds a year by reducing reliance on the national grid, and combined with payments under the Smart Export Guarantee, this further cuts energy costs.

An increasing number of homes are installing solar panels as they become more affordable. As part of the Effective Energy Group, Effective Home has been installing solar panels in homes across the UK since 2008.

If you’re considering installing solar panels, contact Effective Home to arrange a free site survey.

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Justine Effective
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