The Smart Export Guarantee (SEG) is a government-backed initiative requiring some electricity companies (those with over 150,000 customers) plus any energy companies that volunteer, to pay small-scale generators (under 5MW) for low-carbon electricity which they export to the National Grid. To receive SEG the electricity has to come from installations located in Great Britain of Solar PV, Wind, Micro Combined Heat and Power (Micro CHP), Hydro or Anaerobic Digestion (AD). The receiving export energy companies may place additional eligibility criteria like MCS certification before paying you.
In SEG, the electricity companies are known as SEG Licensees and the generators (you) exporting their electricity as SEG Generators. The SEG scheme is overseen by Ofgem.
Homeowners and small to medium businesses are using the SEG to earn money on their excess solar electricity that is not used to power their home or business including charging electric vehicles or solar batteries for use later. More on this later.
SEG started in January 2020 as a replacement for the Feed In Tariff (FiT) which guaranteed prices small generators received for their exported electricity up until that point.
The main difference between FiT and SEG is instead of a Government mandated rate for the exported electricity, energy companies set their own tariffs and the small generators exporting their electricity could choose which tariff they wanted. The other main difference is that FiT assumed everyone would export 50% of their electricity, so if you exported more, you would only get paid for the 50%. SEG pays for every kWh exported.
SEG tariffs vary enormously between the SEG Licensees and one company may offer different tariffs to SEG Generators, the only criteria is the tariffs are always above zero.
A SEG Generator does not have to go with their current electricity supplier and can shop around with other SEG Licensees providing the SEG service. However a common situation is many SEG Licensees offer better export rates to their current customers than SEG Generators just using a for export only. For example, the Octopus Energy standard SEG rate is 4.1p / kWh, but if you are a customer already the rate is 15p / kWh.
The amount a SEG Generator earns from exporting their electricity is calculated from an export meter. Unlike incoming electricity bills SEG companies will not estimate your exports, no readings, no payment – a smart meter will automate this for you.
If you already have an import (supply) account with the electricity company you choose to export with, any earnings will come off your electricity bill. If the export electricity company is separate to the import supply, the company will pay through bank transfer. If you go down the separate route check how often you get paid. At the time of writing Shell pays annually every May at month end, SSE are annually from the date of starting, E.ON are annually as well but will do quarterly if you request the payment each quarter, OVO are quarterly, whereas Scottish Power are monthly payers.
Also be aware that just as electricity prices in can change so can export prices change depending on your contract.
Generally your income from SEG is exempt from being taxed if
Significantly more is usually interpreted as 20%. You may still be exempt if you do not match the criteria exactly.
Any SEG income is classed as trading and miscellaneous income and provided the total income in this category does not exceed £1,000, you don’t have to report the income to HMRC.
You can join a SEG tariff but can only earn from one scheme FiT or SEG so you won’t receive any SEG payments.
FiT is valid for the length of the contract, usually 20 years, so you will continue receiving payments through FiT until the contract ends. However if you are certain you can get a better rate through SEG, once a year you have the opportunity to switch from FiT to SEG. Once the switch is made you cannot return to FiT as the contracts are no longer issued.
Think carefully before switching!
To join a SEG tariff the energy system must meet both the fixed general criteria from Ofgem and the electricity companies criteria which do vary –
Some SEG companies will require additional information eg a schematic of your installation, photos of your installation to be approved. Check their websites / terms and conditions before starting the application to make sure you understand what is required. Not providing the information initially will slow down your application or lead to it being refused. As they say in the Scouts, be prepared.
Reading this you may have realised that even at 15p per kWh the SEG export tariffs do not match the import tariffs, and this should be considered carefully when designing your solar energy system.
The best return on your solar investment and greatest savings are your own consumption of electricity generated by the solar panels. For example, saving yourself 29p per kWh not using grid power completely is much better than saving 14p per kWh (the difference between import price and exporting price of 15p per kWh). This would almost halve the Payback Period (repayment time) on your solar installation. (Octopus Energy tariffs Jun to September 2023).
Using these tariff prices this table based on an average 3 bedroom UK house illustrates why using the energy yourself is better giving larger savings and faster payback period rather than just SEG exporting. (For more details on the table please see How Does Solar Energy Save Me Money? article.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
All Within The House | £768 | £0 | £768 | 10.2 Years | £11,340 |
50% House, 50% Export | £384 | £198 | £582 | 13.5 Years | £6,690 |
All SEG Export | £0 | £397 | £397 | 19.8 Years | £2,065 |
Depending on your own situation the system that best meets your needs and gives you the quickest return on your money will vary, but here are some general rules.
You should sign up for an SEG tariff if you are not already on one as there will be times that you cannot use all the electricity generated and earning a little bit is better than none, but important to focus on using your own solar energy first.
Before signing up to SEG, research the SEG Licensees and their tariffs. The information is easy to find, just type “company name seg scheme” into the search box of any search engine. The current SEG Licensees are
Mandatory SEG Licensees
Voluntary SEG Licensees
And of course, if you haven’t solar panels installed already, why not get a quote and start to generate your own solar power and make money while doing it.
Simply click the relevant button and complete the form. We will then be in touch to understand your needs, and provide more information on how a solar energy system can be profitable for your business.
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