Smart Export Guarantee: A Guide

There’s no doubt that renewables are the future of the UK energy market. Households all over the country are coming to realise that there are a huge range of green energy suppliers to choose from. Many of which offer 100% renewable electricity from on and off shore wind farms, solar farms, hydroelectricity and biomass. Some even offer renewable gas from farm, animal and plant waste. But there’s more to helping to create a renewable future than choosing a green energy supplier. Some energy consumers choose to generate their own electricity via PV solar panels and domestic wind turbines. Not only can these help to power your home, any excess energy created can be fed back into the grid, generating income via the Smart Export Guarantee.

What is the Smart Export Guarantee?

The Smart Export Guarantee is a government initiative overseen by energy watchdog Ofgem, and facilitated by energy suppliers around the country. Although all of the UK’s largest energy suppliers are legally obliged to offer the SEG, a growing number of smaller suppliers have also begun to offer this concession.

Essentially, a fee is paid per kWh for excess energy that is generated by renewable technologies after enough has been generated to power the home. Renewable technologies may include:

• Photovoltaic (PV) solar panels.
• Domestic wind turbines.
• Domestic hydroelectricity.
• Biomass energy from Anaerobic Digestion (AD).
• Micro-combined heat and power (Micro-CHP).

If you have installed PV solar panels or any other renewable energy generation technology in your home, but have not registered for the Smart Export Guarantee, you’re effectively pumping your excess energy into the grid for free. Unless you’re living completely off the grid, why not offset the cost of the energy you use with the SEG?

Who is the SEG for?

The SEG is for any household that has invested in any of the technology types listed above. The only stipulation is that installations must be based in the UK and have a maximum capacity of 5MW, or up to 50kW in the case of Micro-CHP.

This means that virtually anyone who generates their own energy, but is still connected to the grid, can benefit from the SEG.

How does the SEG work?

When you set up a SEG arrangement with your energy supplier, they become your SEG Licensee. A licensee is required to establish an arrangement whereby they pay for the electricity exported by your installation (PV solar panels etc.). They also have a legal obligation to report to Ofgem on any installations that are listed under the SEG arrangement.

An SEG Licensee has the autonomy to determine the unit rates per kWh paid for energy, the contract length and other terms. Which is why you’ll find that there’s a lot of variation between different suppliers’ SEGs.

As an energy consumer, the price you pay for the electricity you use is largely dependent on the price of wholesale electricity. Indeed, in some cases prices can even drop below zero. The good news is that under the SEG, licensees are obliged to offer a tariff that remains above zero, regardless of wholesale costs.

The value of your SEG payment is calculated by SEG Licensees using Export Meter Readings.

What is the difference between a Smart Export Guarantee and a Feed in Tariff?

If the description of a Smart Export Guarantee sounds an awful lot like a Feed in Tariff (FiT) to you, this is because they are functionally similar in most ways. SEGs are, for all intents and purposes, the mechanism designed to replace FiTs. As of March 2019, Feed in Tariffs are no longer available to new customers. Those with FiTs in place, however, can continue to use them until they expire.

SEGs function in the same way as FiT tariffs and the rates are fairly similar. However, at the time of writing, rates on an SEG aren’t quite as favourable as they might be for a Feed in Tariff. There are a couple of reasons for this.

One key difference is that the SEG offers just one payment. The FiT on the other hand, offers two. These are:

• Generation Tariff- A fee for the generation of each kWh of energy, including energy you do not export to the grid..
• Export Tariff- This payment covers the units of electricity that you export back into the grid. It is assumed to account for half the energy you generate.

The SEG pays only for the energy you feed into the grid, not for the energy you generate.

Another reason why the SEG doesn’t offer rates as favourable as a FiT is that they are paid for in different ways. Licensees / suppliers pay outright for SEGs, whereas FiTs are paid for with a levy

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

In most cases, even if you can do this, it is not advisable. Some energy suppliers offer you the chance to opt out of your Feed in Tariff once every 12 months. Or you may be bound to remain on your Feed in Tariff for the full term (usually 20-25 years).

Most, however, will find that the payments they receive on a FiT exceed what they are likely to get on even the most favourable Smart Export Guarantee. As such, in the vast majority of cases, it’s recommended that you see out your FiT until it expires before changing to a SEG. At least for the foreseeable future.

Which companies have Smart Export Guarantee tariffs?

Since the start of 2020, it has become a legal obligation for the bigger energy suppliers to offer Smart Export Guarantees to their customers who generate their own energy. As such, you’ll find that all of the “Big 6” energy suppliers (who provide around 70% of the UK’s gas and electricity) offer the smart export guarantee. These are:

• British Gas
• Scottish Power
• SSE
• EDF
• E.On
• N Power

However, there are also a number of smaller or lesser-known suppliers that also offer the Smart Export Guarantee to their customers. These include:

• Avro Energy
• Social Energy
• Octopus
• Bulb
• Good Energy
• OVO (who own SSE)
• Shell Energy
• Green Network Energy
• Utility Warehouse

As the Feed in Tariffs start to become phased out, we can expect more small-scale suppliers to begin providing Smart Export Guarantees. Indeed, many of the UK’s small green suppliers are keen to build communities of “members” who feed green energy into their supply.

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

PV solar panels are the most common way for UK consumers to generate energy, with over 800,000 PV solar panels in active use in homes all over the country. As such, if you’re thinking of applying for a Smart Export Guarantee, it’s likely that you have installed (or will be installing) PV solar panels.

In which case, you might reasonably wonder how much you could expect to earn with solar panels and the Smart Export Guarantee. Needless to say, that depends on which supplier / licensee you use. While energy suppliers are legally required to provide a rate that’s above zero, some are significantly higher than zero compared to others. At the time of writing (November 2020) energy suppliers are paying anywhere from 1p and 5.5p per kWh of energy. There are even some, such as Tesla (working with Octopus Energy), that pay as much as 8p-11p/kWh on the condition that you use a specific storage battery in your setup.

Even if you opt for a high-paying SEG tariff that doesn’t require to use a specific kind of battery, you may expect to receive as much as £109 per year if you generate around 3,000 kWh of electricity per year and feed 50% of this back into the grid.

What’s more, this will be supplemented with the savings incurred from relying on less energy from the National Grid.

See the chart below to ascertain how much money could be earned / generated with one of the best SEG tariffs on today’s market:

As we can see, the energy savings eclipse the earnings and combine to put a significant dent in household energy costs. All while reducing your household’s reliance on the grid and reducing your carbon footprint.

Of course, even with a good SEG tariff, your savings and earnings may vary. There are a number of factors at play, including:

• Your export tariff rates .
• How much energy you export to the grid.
• When you export your energy (some SEG tariffs have time-variable rates).
• How much of the electricity your household uses.
• How much you pay your supplier per kWh of electricity.
• How much time you and your family spend at home.

These factors will help you to ascertain how long your installation will take to pay for itself and start to become profitable. You may find this calculator from the Energy Saving Trust useful.

Should I choose an SEG tariff that uses a specific battery?

A home battery allows you to store more of the energy you generate, so you can use more of it at home and generate further savings on your energy bills. However, batteries can muddy the waters of your tariffs, so you should do your homework before you consider installing one. Batteries represent a degree of upfront cost that you’ll need to factor into your system’s profitability.

What’s more, different suppliers and SEG tariffs have different rules around whether you can earn money on the electricity stored in your battery. Especially if saif battery contains ‘brown’ electricity from the grid. However, if your tariff permits, you can box clever by storing energy and feeding it back into the grid at times when export rates are higher.

While you may be able to get a much higher rate by switching to a SEG tariff that requires you to use a specific battery, you should think twice before doing so. This will make it harder to switch suppliers in the future, making you more beholden to your supplier / licensee. While they may be the best fit for you right now, there’s no way of knowing whether they’ll be an equally good fit for you a few years down the line.

Which begs the question…

How long does my Smart Export Guarantee last?

Another key difference between SEG tariffs and their predecessors is the length of the terms. While FiTs tend to be 20-25 year contracts (albeit with a yearly opt-out), SEG tariffs tend to be much more flexible. Most suppliers / licensees offer a rolling 12 month contract, making it easier to switch suppliers as rates fluctuate. As more and more suppliers become SEG licensees, we can hopefully expect rates to become more favourable as competition grows more fierce.

Again, it’s important to remember that individual suppliers have autonomy over the length of their SEG contracts, so make sure you know how long you’re tied to a supplier before you commit to a new contract.

How do I claim my Smart Export Guarantee?

Claiming your SEG tariff is every bit as easy as claiming your Feed in Tariff.

When you’ve installed your equipment and chosen your licensee, you’ll need to fill in an application form. This form will likely ask you to provide:

• A Smart Export Meter reading.
• MCS certificate and proof of ownership (for installations below 50kW).
• Proof of grid connection, proof of ownership, and proof of commissioning (for installations over 50kW).

Submit your application form and your supplier / licensee will get the ball rolling.

Can I get a Smart Export Guarantee tariff?

If you’re generating energy with PV solar panels, wind turbines, hydroelectricity, biomass or Micro-CHP, as long as the installation is based in the UK you can almost certainly get a Smart Export Guarantee tariff. But be aware that not all SEG tariffs are created equal, and there’s enormous variation between what different licensees or suppliers are willing to pay you for each unit of energy you generate.

And with more and more energy suppliers offering the SEG, trawling through the market to find the best rates can be a time-consuming slog.

That’s where we come in.

As well as ensuring that you get the greenest and most affordable tariffs on the market, we can also help you to find a supplier that offers Smart Export Guarantee tariffs. So you can make more from the money you export, saving money on your energy bills and offsetting the cost of the grid energy your household uses.

Want to know more?

We’d be happy to tell you more about how we can help you find the perfect Green Energy tariff tailored to your needs. Get in touch with us today on 0330 054 0017 to talk to a member of our team.

We’re available from 9am to 7pm.

FAQ

Can I sell my Feed in Tariff?

When you move house, you are still responsible for your Feed in Tariff for the remainder of its length. You can retain ownership of the tariff in theory, but this will involve relocating your setup to your new home. And this may prove problematic.

As a rule, ownership of the Feed in Tariff automatically transfers to the new owner of your home. While you may not be able to sell the tariff to them directly, it can certainly add to the resale value of your property, and offset your liability in this way. Talk to your supplier about how to transfer the tariff to your home’s new owner, as different suppliers have their own rules and guidelines.

Who supplies my Smart Export Guarantee?

While the Smart Export Guarantee is a government initiative, it is supplied by the energy supplier who acts as a licensee in the agreement. Suppliers have autonomy over the rates they provide, the length of your contract and other particulars. So it’s absolutely essential to find the best supplier / licensee for your needs.

What is the difference between a Generation Tariff and an Export tariff?

Generation and Export Tariffs are the two components of Feed in tariffs. The Generation Tariff pays for the energy that you generate at home per kWh. The Export Tariff pays for the energy that is surplus to your home’s requirements and is fed back into the grid.

Unfortunately, these do not apply to a Smart Export Guarantee. SEGs only pay you for the energy that you export. Although you may be able to get more by feeding energy into the grid at peak times.

What happens to my Smart Export Guarantee if I change supplier?

That’s up to you. One of the advantages of SEGs is that they afford customers more freedom than Feed in Tariffs. If you change your energy supplier, you can still keep your SEG with your current licensee. And once your rolling contract is ready to roll over, you can change to another licensee of your choosing. Your energy supplier needn’t necessarily be your licensee.