Jul 12, 2023

A Guide to the Smart Export Guarantee (SEG)

The Smart Export Guarantee presents an opportunity for both financial gain and contributing towards a sustainable future.

A Guide to the Smart Export Guarantee (SEG)

In a nutshell, the smart export guarantee is a government-backed initiative that aims to incentivise the export of excess renewable energy to the grid. This innovative program allows you to earn money by selling any surplus energy generated by your solar panels or other renewable energy sources. With the rising demand for sustainable solutions and the increasing popularity of renewable energy, the smart export guarantee provides an excellent opportunity to not only reduce your carbon footprint but also generate additional income.

But how does it work exactly? Well, through the smart export guarantee, you can sign up with an energy supplier that offers a competitive export tariff. This means that for every unit of the excess energy you export back to the grid, you will be paid a certain rate. The more energy you generate and export, the more money you can earn.

However, the smart export guarantee is just the tip of the iceberg when it comes to renewable energy incentives and opportunities. In this comprehensive article, we'll delve deeper into the intricacies of the program, explore the benefits it offers, and provide you with valuable insights from renowned experts in the field.

Smart Export Guarantee (SEG) Tariff Rates & how they work

Solar Energy UK – Smart Export Guarantee League Table - Updated 05 January 2023

In the table above, you can compare rates from Smart Export Guarantee suppliers, comparing the rates and other variables from suppliers is a must to find the perfect fit for you. Take a look at the information provided and see which one could be right for you!

There are two types of SEG tariffs, fixed and variable. Although the rates in the table above are all fixed, meaning they do not change for the entirety of your contract, flexible rates can vary depending on fluctuations in the energy industry. As expected, both types of these tariff types come with risk, for example, if you are on a flexible contract and the price of electricity goes down, you are at risk of being paid much less for the electricity you produce, however, if the price shoots up, you could be earning much more. As for the fixed tariffs, you will not be paid any more or less no matter what, so if you signed up for the scheme when prices are low, and they shoot up, you may be missing out on a big pay-out, however, you are protected by price drops and your income is likely to be much steadier.

The SEG does not prescribe a minimum tariff rate. However, it mandates that the tariffs cannot be negative, meaning that small-scale generators should always be paid for the electricity they export to the grid. The actual tariff rates are set by the individual energy suppliers. Therefore, rates may vary from one supplier to another, and it's recommended that generators shop around for the best deal.

As shown in the table above, some suppliers offer more or less than others, this may sway your decision, but there are reasons for the variations in prices. In the ‘Includes battery storage’ column, some suppliers such as Tesla include battery storage, however, it must be a Tesla Powerwall, which creates restrictions, these restrictions do come with positives though, as Tesla offers the highest prices for your energy.

Benefits of the Smart Export Guarantee (SEG) Scheme

Additional Income:

The primary benefit of the SEG scheme is that it provides an opportunity for small-scale energy producers to earn extra income. Under this scheme, energy suppliers with over 150,000 customers are mandated to pay these smaller producers for the excess electricity they feed back into the grid. The rates for this energy vary depending on the supplier and the time of export, but the income can be a significant supplement for those who have invested in renewable energy sources like solar panels or wind turbines.

Promoting Sustainability:

By encouraging the generation of low-carbon electricity, the SEG scheme contributes significantly to sustainability efforts. It incentivises individuals and businesses to invest in renewable energy sources, reducing reliance on fossil fuels and helping to decrease the overall carbon footprint. This contributes to the UK's long-term goal of achieving net-zero carbon emissions by 2050.

Encouraging Innovation through a Diverse Energy Mix:

Another important benefit of the SEG scheme is the stimulation of innovation in the energy sector. By incentivising a wide range of renewable energy sources - including solar, wind, hydro, and anaerobic digestion - the scheme promotes a diverse energy mix. This not only strengthens the resilience of the energy supply but also encourages ongoing innovation and development in renewable energy technologies.

How to get involved in the SEG scheme

Eligibility: Before beginning, confirm that your business is eligible to participate in the SEG scheme. This usually means being a small-scale low-carbon electricity generator, with an installed capacity of up to 5MW, or up to 50kW for Micro-CHP.

Installation: Install an eligible technology. This could include solar PV, wind, micro combined heat, and power (CHP), hydro, or anaerobic digestion. It must also be an MCS-certified product and be installed by an MCS-certified installer to be eligible.

Metering: Install a smart meter or an export meter so that you can measure the electricity you're exporting.

Choose a Supplier: Compare offers from different electricity suppliers. By law, energy suppliers with more than 150,000 customers must offer a SEG tariff. Smaller suppliers can voluntarily offer a SEG tariff. The rates paid for exported electricity will vary depending on the supplier, so it’s worth shopping around to find the best deal.

Apply: Once you've chosen a supplier, you'll need to apply to them for the SEG. They will likely require information about your installation, your MCS certificate number, and your MPAN (Meter Point Administration Number) which is a unique number to your property.

Contract: If your application is approved, you'll then enter into a contract with the supplier. They will pay you for the electricity you export to the grid.

Export and Earn: Once you are set up, the system will begin generating electricity and you will start receiving payments from your supplier for your exported energy.

Energy Consultant: Working alongside an energy consultant can not only make the entire process much simpler but get you the best results for your business, as they are likely to have years of experience in the industry, they will understand your business’s needs and find ways to accommodate them. Not only can you work alongside them, but they will also take away 99% of the boring admin work that comes with a scheme like this, ensuring you can keep an eye on your business at all times.

Challenges and Limitations

No Minimum Tariff: Unlike the predecessor, the Feed-in Tariff (FiT) scheme, SEG doesn't set a minimum tariff that energy suppliers must pay to the generators. While it stipulates that the tariff can't be less than zero, it means the suppliers have a lot of leeway to set low rates.

Dependent on Smart Meter: The SEG scheme requires participants to have a smart meter installed that can measure the exported energy. Some homes may not yet have a smart meter, and even those that do might have a model that doesn't support export readings. Moreover, the roll-out of smart meters has faced numerous delays and problems.

Doesn't Cover Installation Costs: The income from the SEG may not be enough to cover the initial cost of installing eligible low-carbon technology. While the scheme aims to promote renewable energy sources, it might not be financially viable for all households.

Variable Rates: Many suppliers offer flexible tariffs that vary with the wholesale electricity price. While this could sometimes result in higher payments if the price is high, it can also lead to lower payments when the price drops, adding a level of uncertainty for the generators.

The complexity of Tariffs: The complexity and variety of tariffs offered by different suppliers can be overwhelming and challenging for some consumers to navigate. However, with the help of an energy consultant, this can be overcome.

Challenges with Excess Production: If a household doesn't produce a lot of excess energy (perhaps because they're using most of what they generate), the financial benefits of the SEG will be minimal. Conversely, generating a lot of excess energy could indicate that a smaller, less expensive system might have been more cost-effective.

Contractual Limitations: Suppliers' contracts may come with various terms and conditions that could restrict the benefits of the scheme. For instance, some contracts might have minimum export requirements or penalties for switching suppliers.

The Smart Export Guarantee (SEG) presents an opportunity for both financial gain and contributing towards a more sustainable future. Despite the complexities of tariff rates, metering, and supplier contracts, with proper planning and possible assistance from an energy consultant, these challenges can be managed effectively. Though the SEG may not cover the initial cost of renewable technology installations, its long-term benefits like reducing carbon emissions and fostering sustainable energy supply are worth considering. In essence, the SEG isn't just a scheme, but a stride towards a more sustainable, greener future. It underscores the value of renewable energy and the role we all can play in this critical energy transition.

Frequently Asked Questions (FAQs)

  1. Can homeowners participate in the SEG scheme? Yes, homeowners with eligible small-scale renewable energy installations can participate in the SEG scheme.
  2. Are there any specific requirements for the smart meter used in the SEG scheme? Yes, the smart meter used for measuring the exported energy must meet the technical and safety standards specified by the energy supplier.
  3. Are all energy suppliers required to offer export tariffs under the SEG scheme? No, only energy suppliers with more than 150,000 customers are obligated to offer export tariffs under the SEG scheme.
  4. Can I switch energy suppliers after participating in the SEG scheme? Yes, participants can switch energy suppliers, but it is important to consider the terms and tariffs offered under the SEG scheme by different suppliers.
  5. How can the SEG scheme contribute to reducing carbon emissions? The SEG scheme promotes the growth of renewable energy capacity, reducing the reliance on fossil fuel-based electricity generation and, consequently, reducing carbon emissions.
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