Smart Export Guarantee: how it works

The Smart Export Guarantee (SEG) is a UK government-backed scheme designed to pay homeowners for the renewable electricity they export to the National Grid. It came into effect on 1 January 2020, replacing the Feed-in Tariff (FiT) for new microgeneration installations. Under the SEG, licensed electricity suppliers with 150,000 or more domestic customers are mandated to offer a tariff, and these tariffs must offer a rate greater than zero for exported electricity. This scheme allows homeowners with eligible renewable energy systems, such as solar panels, to turn their surplus energy into financial gain.

Understanding how the SEG works can help you make the most of your renewable energy system. At Fuse Energy, we believe in empowering homeowners with clear information and smart tools to manage their energy. Discover how easy it is to get started with a modern energy supplier by clicking here.

How the SEG scheme works

When your solar panels generate more electricity than your home uses, the excess can be exported back to the National Grid. The SEG scheme ensures you receive payment for every unit of this exported electricity. Your chosen SEG licensee (energy supplier) measures how much electricity you export, typically through a smart meter, and pays you according to their specific tariff rate. You do not need to be an import customer of your SEG supplier to receive payments, though some suppliers offer better rates if you are.

Key benefits for homeowners

The SEG offers a clear financial incentive for homeowners to invest in renewable energy technologies. By earning money for exported electricity, you reduce your overall energy costs and can see a quicker return on your initial investment in solar panels or other microgeneration systems. Beyond the financial aspect, participating in the SEG means you are actively contributing to the UK's renewable energy infrastructure, helping to decarbonise the grid and move towards a more sustainable future. This scheme empowers homeowners to take control of their energy generation and make their homes more energy independent.

Eligibility for the Smart Export Guarantee

To qualify for SEG payments, your renewable electricity generating system must meet specific criteria. These requirements ensure that installations are safe, efficient, and properly connected to the grid.

Required microgeneration technologies

The SEG scheme covers various microgeneration technologies. These include solar photovoltaic (PV) panels, wind turbines, micro combined heat and power (micro-CHP) up to 50kW, hydro, and anaerobic digestion (AD) systems. The total installed capacity of your system must generally be 5MW or less, or 50kW or less for micro-CHP.

Smart meter requirements

A crucial requirement for participating in the SEG is having a meter capable of providing half-hourly export readings. This typically means you need a smart meter (SMETS2) installed. Without an export-capable smart meter, your supplier cannot accurately measure the electricity you send back to the grid, and therefore cannot calculate your payments. If you do not have one, you should contact your energy supplier to arrange an installation.

Installation certification

Your installation and installer must be certified through the Microgeneration Certification Scheme (MCS) or an equivalent accredited scheme, such as Flexi-Orb. While MCS certification is not a legal requirement for installing renewable technologies, it is essential for homeowners to access government incentives like the SEG. This certification provides assurance that your system meets rigorous industry standards for quality, safety, and performance.

SEG tariffs: comparing your options

SEG tariffs are not fixed by the government; instead, energy suppliers set their own rates and terms. This means there is a wide variety of options available, and comparing them is key to maximising your earnings.

Understanding different tariff rates

SEG tariffs can be either fixed or variable. A fixed tariff pays a set rate per kWh for the duration of the contract, offering predictability. A variable tariff, on the other hand, can change over time, with rates often fluctuating based on wholesale market prices. Some suppliers also offer time-of-use tariffs, which pay different rates depending on when you export electricity, often higher during peak demand times.

How to find the best SEG tariff

To find the best SEG tariff, it is advisable to shop around and compare offers from different suppliers. Ofgem publishes a list of SEG licensees, and many energy comparison websites also provide tools to help you compare rates. When comparing, consider not just the pence-per-kWh rate, but also whether the tariff requires you to be an import customer of the same supplier, the contract length, and payment terms. A higher export rate tied to an uncompetitive import tariff could cost you more overall.

ScottishPower SEG and British Gas SEG tariffs

Many major energy suppliers, including ScottishPower and British Gas, offer SEG tariffs. Rates vary significantly between suppliers and tariff types, with some offering enhanced rates to their existing electricity customers. Always check the latest figures directly with the supplier, as rates can change.

Maximising your SEG earnings

Beyond simply choosing a competitive tariff, there are strategies you can employ to increase the financial benefits from your exported electricity.

The role of battery storage

Installing a solar battery allows you to store excess electricity generated by your panels instead of exporting it immediately. This stored energy can then be used to power your home during the evening or exported to the grid when SEG rates are higher, particularly with time-of-use tariffs. While a battery might reduce your immediate SEG income because you export less, it often leads to greater overall savings by reducing the amount of electricity you need to import from the grid.

Optimising export with smart technology

Smart home devices and energy management systems can help you optimise when you use and export electricity. These technologies can learn your consumption patterns and automatically manage your energy flow, for example, by charging your electric vehicle or running appliances during periods of high solar generation or low import prices, and exporting when export rates are most favourable.

Understanding peak export times

If you are on a time-of-use SEG tariff, understanding peak export times is crucial. These tariffs typically offer higher rates during periods of high demand on the grid, often in the late afternoon or early evening. By storing your surplus solar energy and exporting it during these peak windows, you can significantly increase your SEG earnings.

SEG vs Feed-in Tariff (FiT)

The SEG replaced the Feed-in Tariff, but it is important to understand the distinctions, especially if you have an older installation.

Key differences and similarities

The Feed-in Tariff (FiT) was a government-backed scheme that paid for both the electricity generated (generation tariff) and a separate payment for exported electricity (export tariff). It was available to new applicants until March 2019. The SEG, by contrast, only pays for the electricity you export to the grid, not for the electricity you generate and use yourself. SEG rates are set by individual energy suppliers, not the government, though they must always be above zero.

What if you are on a FiT scheme?

If you are currently receiving payments under the FiT scheme, you will continue to do so for the duration of your contract. You cannot receive both FiT export payments and SEG payments simultaneously. However, you can choose to switch your FiT export tariff to an SEG rate. Many SEG tariffs offer higher export rates than older FiT export payments, so it can be worth considering, especially if you have a smart meter. Once you switch from a "deemed export" FiT tariff (where export is estimated) to an SEG tariff, you cannot return to the deemed FiT plan.

How to apply for the Smart Export Guarantee

Applying for the SEG involves a few straightforward steps to ensure your system and documentation are in order.

Step-by-step application process

1. Ensure eligibility: Confirm your microgeneration system is MCS-certified (or equivalent) and you have a smart meter capable of half-hourly export readings.
2. Compare tariffs: Research and compare the SEG tariffs offered by different licensed energy suppliers to find the best rate for your exported electricity.
3. Gather documentation: You will typically need your MCS certificate, proof of ownership of the system, and a letter from your Distribution Network Operator (DNO) confirming grid connection.
4. Apply to your chosen supplier: Contact your preferred SEG licensee directly to apply for their tariff. Most suppliers offer an online application process.

What to expect after applying

Once you submit your application, your chosen supplier will verify your eligibility and documentation. This process usually involves checking your MCS certification and confirming your smart meter's capabilities. After approval, you will sign a contract detailing the terms and rates of your SEG tariff. Payments are typically made periodically, often quarterly (every three months), based on your export meter readings.

Managing your home's energy, including payments for exported electricity, should be straightforward. Fuse Energy offers clear pricing, real-time usage data through our app, and 24/7 human customer support to help you make informed decisions. Our digital-first approach is designed to simplify your energy experience. Switching to Fuse is quick and easy, allowing you to take control of your energy bills and maximise your home's renewable generation. Click here to switch to Fuse Energy today and join a community focused on a sustainable energy future. You can also learn more about our mission to transform the energy landscape here.