A Look at the Smart Export Guarantee Six Months On

Last year the government unveiled a new scheme to be launched in January 2020 that would compensate people who produced more electricity than they needed. The new SEG scheme duly came into force as planned in January. The scheme requires all energy suppliers with at least 150,000 domestic customers (including the big six, such as EDF Energy and Npower, and smaller companies such as Ovo and Bulb) to buy surplus solar, wind or other renewable energy generated by its customers under the smart export guarantee (SEG). This means that homeowners can be compensated for the electricity that they put back into the grid. Offering an SEG tariff is optional for smaller companies.

You are most likely to benefit from this scheme if you have solar panels, but you will also qualify if your home produces, renewable energy from wind, hydro, micro combined heat and power or anaerobic digestion.

The SEG has replaced the previous feed-in tariff (FIT), which is no longer available to new customers. Although both schemes reward at-home electricity production there are a few essential differences. FIT tariffs are funded by a levy on all energy bills and because home electricity production is paid for at a rate set by energy regulator Ofgem there is no need for homeowners to shop around. Another significant difference in the two schemes is that with the FIT tariff the homeowner is compensated for all home electricity produced whether or not it is fed back into the national grid. This is not the case with the SEG which focuses on Individual energy companies paying home electricity producers directly for the electricity they feed into the National Grid which is then available for others to use. The SEG scheme tends to be less generous than the FIT and for this reason it is recommended that you wait until your FIT contract has ended before moving to an SEG tariff.

In order to take advantage of the SEG scheme, you must sign up to a dedicated SEG tariff. The energy supplier you choose will set the rate paid for the electricity you export. As some deals are better than others it’s best to shop around.

It will come as no surprise that now private companies control the prices of SEG tariffs that the amount that you get back for your excess energy production varies somewhat between tariffs.

The Solar trade Association (STA) has produced data which reveals that the three best-value tariffs will pay you more than five times the amount you would get for the energy you produce from the worst-value tariff.

Social Energy pays 5.6p/kWh, while Octopus and Eon both offer fixed tariffs paying 5.5p/kWh. In comparison, the lowest-paying company pays just 1p/kWh. However, this is better than the dismal 0.5/kWh that was the lowest offer in January 2020.

The tariff you are offered could make a big difference to how much you earn depending of course on how much you’re able to export.

A household with a fairly typical solar panel set-up could earn £69 more a year (£84 vs £15) with the highest-paying tariff rather than the lowest-paying.

This figure is worked out based on tariffs available as of August 2020 for a 4kWp system exporting 1,500kWh of electricity to the grid in a year. To put this into context, the average household uses 2,900kWh electricity in a year.

The Solar trade Association keeps a list of tariffs and updates when required as below:

Variable   
 ProviderTariff NameTariff Rate
 Octopus EnergyOutgoing AgilePegged to half-hourly wholesale rate
Fixed-Rate tariffs        
 SupplierTariff NameTariff Type (fixed, currently fixed* or variable rate)Tariff LengthTariff RatePayment CycleIncludes Battery StorageRequirement to be on the suppliers’ import tariff?
1Social Energy^Smarter ExportCurrently FixedNo Fixed End Date5.6p3 monthsYes (must be SE battery)Yes
2Octopus EnergyOutgoing FixedFixed12-month fixed term5.5pMonthlyYesYes
E.ON EnergyFix & Export ExclusiveFixed12-month fixed term5.5pUnknownUnknownUnknown
4Bulb EnergyExport PaymentsFixedNo Fixed End Date5.38p3 monthsYesNo
5OVO EnergyOVO SEG TariffFixed12-month fixed term4.0p3 monthsCase by case basisNo
ScottishPowerSmart Export Variable TariffCurrently FixedNo Fixed End Date4.0p6 monthsUnknownNo
7SSESmart Export TariffFixedNo Fixed End Date3.5p12 monthsCase by case basisYes
EDF EnergyExport+EarnFixed12-month fixed term3.5p3 monthsNoNo
Shell EnergySEG V1 TariffCurrently FixedNo Fixed End Date3.5p12 monthsUnknownYes
Green Network EnergySEG TariffCurrently FixedNo Fixed End Date3.5pQuarterlyNoNo
11British GasExport & Earn FlexCurrently FixedNo Fixed End Date3.2p6 monthsYesNo
12E.ON EnergyFix & ExportFixed12-month fixed term3.0pUnknownUnknownUnknown
UtilitaSmart Export GuaranteeUnknownUnknown3.0pUnknownUnknownUnknown
AvroSmart Export TariffUnknownUnknown3.0pUnknownUnknownUnknown
15Utility WarehouseUW Smart Export GuaranteeFixedNo Fixed End Date2.0pQuarterlyNoNo
16EE SEG January2020v.1Currently FixedNo Fixed End Date1.0pUnknownUnknownUnknown

*Currently Fixed means that the supplier has specified a fixed rate but has not fixed this for a specific timeframe / the supplier has caveated that the current fixed price might change in the future

^Offering tariffs on a voluntary basis

Shell Energy has recently launched a new type of tariff that is slightly different to SEG tariffs.

Rather than paying you directly for the electricity you export to the grid you earn credits for energy exports during the summer months which means that you are then able to get a discount of up to £150 on your winter energy bills. Unlike the SEG, it’s targeted solely at solar-panel owners.

It is being marketed by Shell as a solution to at-home waste but there is a significant cost attached to this tariff. In order to take advantage of this tariff you have to own a SonnenBatterie to store solar energy. This is because the battery allows you to capture electricity so that you can use it another time. This in turn maximises the benefits of having solar panels. The downside to this is that SonnenBatteries are among one of the pricier home energy storage batteries on the market starting from £6,499.

On top of that the import tariff Shell offers is relatively expensive, priced at £1,016 a year for a household that uses a medium amount of energy. The import tariff allows you to buy gas, and any electricity you need when the amount you generate from your solar panels isn’t enough. This tariff will only save you £111 on the energy price cap for customers on a standard or default tariff, which limits how much suppliers can charge per unit of energy.

However, it is worth taking into consideration that Shell says their customers will be able to get up to £150 off their winter energy bills, which is quite likely to be more money than most solar panel owners could expect to make by selling their energy to another customer using SEG.

The Shell tariff works on the basis that those on this tariff will be able to produce up to 75% of their own electricity. The caveat to this is that when you need to import gas and electricity it will most likely be more expensive than other suppliers.

Solar panels continue to become less expensive to buy but you should not expect any earnings for SEG to cover the cost of installing solar panels any time soon.

Despite this there are still many good reasons to get solar panels. Most homeowners will be happy to hear that a solar PV system can reduce their energy bills which combined with the SEG earnings will cut the solar payback time quite considerably. You can also bask in the glow of being self-sufficient if you produce your own electricity though you’ll also need an energy storage battery to make this a reality. Most important of all is being able to reduce your carbon footprint by becoming a sustainable consumer and helping protect the future of the human race.