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Smart Export Guarantee gets a luke-warm reception

The Feed-in Tariff subsidy kick-started renewable energy take-up but its replacement has yet to set eco-friendly hearts racing, says John Pullen.

Many properties and commercial buildings now have to be fitted with solar panels to offset their energy usage in order to pass modern building standards. 

However, the Feed-in tariff (Fit) closed to new entrants on March 31, 2019 and at the same time the guaranteed export payment was also removed.  

This meant that during periods of high generation and low onsite demand, electricity would be exported to the grid for no compensation. The small-scale generator would in effect be subsidising the big six electricity companies by providing them with energy for nothing. 

To mitigate against the potential political backlash, the UK Government introduced the Smart Export Guarantee (SEG) which will be available from January 1, 2020. It will provide a means of compensating small-scale generators (less than 5MW) for energy exported to the grid. Usage must be tracked by a smart meter.

 Licensed suppliers with more than 150,000 domestic customers are obliged to provide at least one export tariff. As of July 2019, only two suppliers, Octopus Energy and E.On, had announced their plans.

The rate paid under the Smart Export Guarantee must be “more than zero” – as such it hasn’t been enthusiastically endorsed by the industry, with the Energy Savings trust noting that “for most, installations will remain an environmental rather than a financial decision”. 

Scottish renewables similarly highlighted the very limited appeal with;

The SEG only supporting a small segment of the market – i.e. supporting some rooftop solar PV development but little else. 

With political interest directed elsewhere there is little focus on supporting and developing the renewable industry. Like the Feed-in tariff, the SEG is a step in the right direction of encouraging domestic energy to be a two-way process. 

New entrants to the electricity supply market, such as Octopus Energy, want to encourage their modern, tech-savvy customers to consume, store and sell energy in a flexible and generally smarter way. Whether the SEG will do enough to encourage the widespread adoption of this is yet to be seen.