A clearer future for the renewable industry. The long awaited SEG (Smart Export Guarantee) has now been formalised and the structure set. Energy providers will have to have an export tariff in place before the 1st of January 2020.
The industry has been waiting for the implementation of the SEG since the closure of the FIT (Feed In Tariff) scheme which ended on the 31st of March this year. The SEG means that any customers with solar PV systems, or other qualifying technologies, that feed energy back into the national grid will receive payment for energy that is exported.
Following a consultation period involving industry leaders, the Government, and energy suppliers the finer details of the SEG have been agreed upon.
All licenced energy providers with more than 150,000 customers must provide an export tariff, originally this was due to be any supplier with more than 250,000 customers but that has been reduced. Smaller energy suppliers can also offer an export tariff on a voluntary basis, these suppliers will be help to the same conditions and rules as larger suppliers. Payments must be made to customers who are exporting energy to the grid that has been produced using either solar PV, hydro, micro-combined heat and power, onshore wind, or anaerobic digestion.
As in the original details the tariff amount will be left to the supplier to set, the only stipulation is that the amount offered must be greater and zero. The design of the tariff has also been left for the supplier to set. Some suppliers has already set their own tariff systems such as Octopus who offer a flat rate tariff at 5.5p per kWh, as well as ‘Agile Octopus’ their variable rate tariff.
Generators up to 5MW will be guaranteed payment from suppliers, it is thought that over time these tariffs and payments will become smarter and reflective of supply and demand across the national grid.
Smart meters will play a crucial part in this. To qualify for the SEG anyone wishing to claim an export tariff must have a Smart Meter installed. The meter must also be capable of half hourly export metering. Meters must be registered for settlement under the Balancing and Settlement Code.
To ensure that safety and consumer protection is up held all installations must be installed under the MCS scheme or suitable equivalent, and installers installing the systems must be suitably qualified, and have the correct certifications to MCS standards or a suitable equivalent. There will not be a central registration of installations.
One of the grey areas of the original consultation was whether payments would be made available for storage systems.
Tariff payments for storage will be made available, but only where the storage is co-located with a renewable energy source, this is also at the discretion of the supplier who may want further evidence that any storage exports are still ‘green energy’ as opposed to ‘brown energy’. Currently this doesn’t look like it will include storage in the form of EV’s.
Annual reports will be produced by Ofgem, detailing how the Smart Export Guarantee is working, and the uptake of tariffs. Ofgem are likely to offer further guidance to suppliers around the implementation of tariffs.
Although this is a step in the right direction, especially in fairness for those generating energy and exporting it to the grid this is in no way a replacement for renewable incentives.
Following the removal of the Feed In Tariff and Export Tariffs earlier in 2019 the number of installations dropped. Official statistics showed that only 3.6MW of solar was installed in April 2019 across the 2 bands, a huge drop compared to the 40MW of solar installed in March as people rushed to get a slice of the last FIT. This is also a drop in year on year statistics 6.4MW of solar was installed across the 2 bands in April 2019.
The SEG is welcomed but not celebrated by the industry with some seeing it simply as ‘better than nothing’. The SEG announcement comes in the same week as Teresa May pledges that the UK will become carbon neutral by 2050, with a plan to make this legally binding. Such an announcement will have an impact on all of us, but with seeming little support for renewable energy coming from the government, is this really a realistic target?
Full details of the SEG can be found on the Government website here: The future for small-scale low carbon generators.