Smart Export Guarantee (SEG): Are You Eligible?
The Smart Export Guarantee (SEG) pays homeowners and businesses for renewable electricity they generate but don’t use. It came into force in January 2020 and replaces the previous Feed-in Tariff (FIT) scheme. Read on to discover how the Smart Export Guarantee works, what you could earn from it and how to apply.
What is the Smart Export Guarantee?
The Smart Export Guarantee is a clean energy initiative set up by the government that rewards households and businesses in Great Britain for generating their own renewable electricity. The scheme allows customers who generate excess energy to send it to the national grid in exchange for a small payment. This scheme is an updated version of the Feed-in Tariff scheme which was canceled a while back. Let's take a look at how it works:
This diagram shows how the Smart Export Guarantee works.
Rather than the government simply subsidising households and businesses for generating electricity, the SEG makes it so that energy suppliers can buy surplus energy from the customer instead. Suppliers essentially offer the user a reverse energy tariff, where they stipulate a price per kilowatt-hour (kWh) for the electricity they generate and export.
Do I qualify for the Smart Export Guarantee?
There are five types of low-carbon electricity generating technologies you may have at your home that can make you eligible for the Smart Export Guarantee:
- Solar photovoltaic (PV) panels
- Wind
- Micro combined heat and power (CHP)
- Hydro
- Anaerobic digestion (AD)
The extra energy you create from these home systems can be sold back to the energy grid. For solar, wind, hydro and anaerobic digestion systems, your total capacity cannot exceed 5MW, while the limit is 50kW for Micro CHP. You must also have an export meter to be able to send the electricity back to the grid. It's important to note that you do not qualify to receive the Smart Export Guarantee if you already benefit from a Feed-in Tariff.
Can I still qualify for SEG payments if I have already received a government grant for installation? Yes, you can still qualify if you have previously received government funding, because the Smart Export Guarantee is separate from any other installation grants.
Who offers Smart Export Guarantee?
All energy suppliers with more than 150,000 customers are obliged by law to offer their own Smart Export Guarantee tariff as SEG licensees. Smaller providers can also opt-in if they wish, and some companies which aren’t traditional energy suppliers, such as Tesla, have also started to offer SEG tariffs.
How much could I earn by producing my own electricity?
While installing renewable energy generation technology and signing up to a Smart Export Guarantee tariff will help you save money on your energy bills in the long run, it is unlikely to offer the same financial reward that some solar panel owners could initially make on the old Feed-in Tariff scheme, which is now closed to new applicants.
With the FIT, the export tariff was uniform for everyone, at 5.5p/kWh currently. However, under the new SEG scheme, there is not a set, flat tariff rate. Instead, suppliers determine their own Smart Export Guarantee rates, similar to normal energy tariffs that vary by supplier.
To determine how much you are paid, data on the number of units of energy you’ve imported from the grid and exported back to the grid is sent directly to your supplier using either a smart meter or half-hourly meter. They will then use this information to determine how much to pay out using the agreed SEG tariff rate.
For example, let's say your solar PV panels produce 3,000 kilowatt-hours (kWh) of electricity over the course of a year. If exactly half of that gets exported back to the grid, you will be paid out for 1,500kWh of what you did not use. To give you an idea of what this translates to in earnings, let's use an imaginary SEG tariff which offers a unit rate of 3.5p per kWh.
| Unit rate | Electricity exported | Total earnings |
|---|---|---|
| 3.5p per kWh | 1,500kWh | £52.50* |
*Real numbers depend on your specific SEG agreement. Figures shown are for illustrative purposes only.
Of course, the amount you will be paid can vary depending on your own system, tariff rates, personal energy consumption and weather conditions. While small-scale energy generators won’t make you a fortune, the Smart Export Guarantee can still help you save money by reducing to your overall energy costs.
Fixed or Variable SEG tariff?
Fixed-rate Smart Export Guarantee tariffs offer a set price for each unit of renewable electricity you export, regardless of the time of day.
Flexible rate SEG tariffs, on the other hand, payout different amounts, depending on how much electricity demand there is on the National Grid. For example, you may be paid more in the evening, when demand is high than in the early hours of the morning when demand is far lower.
SEG licensees determine the export rate and other terms of your tariff. However, this rate must remain above zero, even if the wholesale price of electricity itself falls below 0p.
How do I apply for SEG?
As mentioned above, the Smart Export Guarantee is available to homes and businesses with a generating capacity of up to 5 megawatts of solar PV, wind, hydro or anaerobic digestion, or up to 50 kilowatts for micro combined heat and power.
Generators with an eligible installation need to apply to an SEG Licensee for payment for electricity exported to the National Grid. This is the company which will provide your Smart Export Guarantee tariff.
Once you’ve decided which Smart Export Guarantee tariff is right for your home or business, you should make sure you have all the following prepared as part of your application:
- Completed SEG tariff application form (available on the SEG licensees' websites).
- A smart meter or half-hourly export meter.
- An up-to-date meter reading.
- Proof of ownership of energy generation unit.
- Your MCS certificate for solar PV. You should have received when the panels were first installed.
- A separate application for anaerobic digestion, if applicable. This is available on the Ofgem website.
- Export MPAN number.
- Bank account details.
Once you have submitted your application, you can expect to wait up to 28 days for your chosen SEG licensee to contact you.
- Remember: You cannot receive the Smart Export Guarantee if you already benefit from a Feed-in Tariff.
Smart Export Guarantee vs Feed-In Tariff (FIT)
With so many references to the Feed-in Tariff, we thought it best to explain it a bit further. The Feed-In Tariff was launched in 2010 to encourage domestic and business customers to invest in small-scale renewable energy generation. As the cost of equipment and installation got lower over the years, the FIT scheme reduced significantly and becameclosed to new applicants in April 2019.
While the Smart Export Guarantee can be considered the FIT’s replacement, it only pays out on the energy that is exported. The FIT, on the other hand, rewarded customers for generation, as well as export.
The Smart Export Guarantee also puts the responsibility on the suppliers to set their own export tariff rates, while the Feed-In Tariff rate was determined by Ofgem. Those who were lucky enough to sign up to a FIT before it closed to new applicants currently receive 5.5p/kWh, while homes and businesses on the Smart Export Guarantee can get anywhere between 0.5p and 11p/kWh, depending on their SEG licensee (energy supplier).
Will I still receive my FIT payments if I change energy supplier?
If you currently receive Feed-in Tariff payments, you will continue to do so for the duration of your FIT contract, which is usually around 20 years.
As the Feed-In Tariff offers payments for generation, as well as export, you’ll make more money by sticking with it for the remainder of your contract and then switching over to the Smart Export Guarantee when the contract has expired.
Some SEG licensees, such as Octopus Energy and So Energy, will allow you to retain the generation part of your Feed-In Tariff and still sign up to their Smart Export Guarantee tariff, so it’s always worth researching and asking around, if you are considering switching suppliers.