Smart Export Guarantee: Everything you need to know

As the UK government works to reduce carbon emissions to meet its Net Zero goals, renewable energy is playing an increasingly important role for consumers and businesses. Various incentives have been set up to encourage more people to adopt renewable technologies, including the Smart Export Guarantee.

What is the Smart Export Guarantee?

The Smart Export Guarantee (SEG) is a government-backed initiative that allows small-scale generators of low-carbon electricity to be paid for exporting electricity back to the National Grid. Participating electricity suppliers, known as SEG licensees, determine the rate that the SEG generators are paid for each unit of electricity, and facilitate its distribution to the National Grid

All large energy suppliers must participate in the SEG. This means those with more than 150,000 domestic electricity customers. Smaller suppliers can choose to participate on a voluntary basis.

Who can take part?

You can sign up for the SEG if you’re a UK homeowner with one of the following installations:

– Solar photovoltaic (solar PV)

– Wind

– Micro combined heat and power (micro-CHP)

– Hydro

– Anaerobic digestion (AD)

Installations must be located in Great Britain and meet the SEG eligibility criteria. This includes having a capacity of up to 5MW, or 50kW for micro-CHP technologies.

What SEG tariffs are available?

Participating SEG licensees set their own tariffs, offering either fixed rates, which stay at the same price for the length of the contract, or variable rates, which are based on market demand. There are no mandated SEG rates; the only requirement is that the price must be above zero.

If you’re interested in taking advantage of the Smart Export Guarantee, it’s worth exploring the registered SEG licensees to see which one offers the best deal. The rates vary, with available tariffs ranging from 1p/kWh to 20p/kWh for fixed rates, while flexible tariff rates may pay up to 30p/kWh during off-peak hours.

Can I make money on the electricity I generate?

As well as saving money on your electricity bills by generating your own energy, you can also earn money by selling unused energy to the National Grid. The biggest saving comes from buying less energy from your supplier. With the current energy price cap of 24.5p/kWh, you can save up to 24.5p for each kWh of self-generated electricity that you use.

Depending on your energy generation and consumption levels, as well as the SEG tariff you’re on, it’s possible to make a profit. However, as the rates paid through the SEG scheme are almost always lower than the energy price cap, it’s more cost effective to use as much of your self-generated energy as possible rather than buying from your supplier.

The Energy Saving Trust offers a variety of energy tools and calculators to help consumers to estimate savings and choose the right renewable installation for their needs.

Can I switch from my existing Feed-in Tariff?

The Smart Export Guarantee replaced the Feed-in Tariff (FIT) scheme in 2020. This means that you can’t receive an SEG tariff if you’re already receiving FIT payments. While the FIT is closed to new applications, payments are still being made to those with active contracts in the scheme.

To switch to SEG, you’ll either have to wait until the end of your contract, or contact your FIT licensee to opt out of your contract. It’s important to check the terms of your contract, as well as to weigh up the available SEG rates to see whether the change is suitable for you. As FIT payments include tariffs for generating electricity as well as exporting it, while SEG tariffs only pay you for the energy you export, you’ll likely be better off if you stick with the FIT.

Is the SEG available alongside other grants?

As we’ve seen, you can’t participate in the SEG scheme if you already receive payments on the Feed-in Tariff. However, SEG payments aren’t linked to any other financial support around renewable energy installations, so you can combine them with other grants, as long as you’re eligible for them.

The government offers a variety of renewable energy incentives that UK homeowners can take advantage of to increase their energy efficiency and reduce carbon emissions. This includes the Home Upgrade Grant (HUG) for energy-efficient upgrades, which can be used to install solar panels. You could then use these solar panels in conjunction with the SEG for savings on your electricity bill.