The government is introducing new laws that will ensure households and businesses with new small-scale renewable technologies, such as solar panels, are paid for exporting electricity to the grid.
The Smart Export Guarantee (SEG) places a legal obligation on energy suppliers with more than 150,000 customers – covering more than 90% of the retail market – to introduce export tariffs by 1st January 2020.
Under the scheme, homes and businesses that have installed solar panels, wind turbines or other forms of small-scale renewable energy generation, with a capacity of up to 5MW, will be paid for each unit of electricity they sell to the grid, which will be tracked by their smart meters.
It builds on the government’s previous subsidy scheme, the Feed-in Tariff (FiT), which supported the installations of 850,000 renewable projects and closed to new entrants on 1st April 2019 as the price of installing solar panels fell.
The Department for Business, Energy & Industrial Strategy (BEIS) says the cost of residential solar panels are now more than 50% cheaper than in 2011.
The scheme has been designed to continue to grow the small-scale renewables export market by supporting local generation and is expected to help bridge the gap to a smarter and more efficient energy system, when combined with technologies like smart meters and battery storage.
Energy and Clean Growth Minister Chris Skidmore said: “The future of energy is local and the new smart export guarantee will ensure households that choose to become green energy generators will be guaranteed a payment for electricity supplied to the grid.
“We want the energy market to innovate and it’s encouraging to see some suppliers already offering competitive export tariffs to reduce bills. We want more to follow suit, encouraging small-scale generation without adding to consumer bills, as we move towards a subsidy-free energy system and a net zero emissions economy.”
Some energy suppliers, including BusinessComparison, Octopus Energy and E.ON, are already offering new smart tariffs to customers, with some offering more payments than the FiT scheme.
Greg Jackson, Chief Executive of Octopus Energy added: “These smart export tariffs are game changing when it comes to harnessing the power of citizens to tackle climate change. They mean homes and businesses can be paid for producing clean electricity just like traditional generators, replacing old dirty power stations and pumping more renewable energy into the grid.
“This will help bring down prices for everyone as we use cheaper power generated locally by our neighbours.”
Ofgem will prepare an annual report on the provisions made by suppliers for smaller scale exporters, including the range, nature and uptake of SEG tariffs. The government will review this to monitor whether the market is delivering and effective and competitive range of options for small exporters.