The Feed-in Tariff
The Feed-in Tariff was a UK Government initiative that paid households for every kilowatt hour (kWh) of electricity that they produced from renewable sources (e.g. solar panels, wind turbines, etc.). On top of this, homeowners were also able to sell any unused electricity to the National Grid (this was called the Export Tariff).
The Feed-in Tariff was a huge success. Between 2010 (when the scheme began) and 2017, the UK’s renewable energy capacity rose from 9.3 gigawatts (i.e. 9.3 billion watts) to a massive 38.9 gigawatts. The Feed-in Tariff concluded in April 2019, but anybody who signed up before the deadline will still receive payments until their contract (usually 20 years long) expires.
The Smart Export Guarantee (SEG)
The Smart Export Guarantee (SEG) is going to fill the hole that the departed Feed-in Tariff has left behind. However, instead of being based on payments from the government, the SEG will ensure that energy suppliers pay homeowners for any unused solar-generated electricity.
While the Feed-in Tariff involved Ofgem setting the rates, the SEG will let energy suppliers determine their own prices. In a competitive market, this should lead to companies outbidding each other with higher repayment rates, creating better deals for the homeowner. Ideally, you’ll be sitting back in your solar-powered home while suppliers scrabble for your business.
What’s more, the SEG will be a lot fairer than the Feed-in Tariff. The government used to pay homeowners for just 50% of their unused solar-generated electricity, even if households were expor@ng as much as 80% of their electricity back to the grid. In contrast, when the SEG is in place, energy suppliers will pay homeowners for every single bit – although it will probably require each household to have a smart meter (to monitor things accurately). Thankfully, there’s not long to wait – the government will have the SEG up and running by the end of 2019.
So, once the SEG is in place, homeowners will be benefitting from 100% of their solar panels’ hard work:
- All used solar-generated electricity will contribute to savings on your energy bills (which can be up to £220 per year, according to Energy Saving Trust)
- All unused solar-generated electricity will be bought back by your energy supplier
The best way to make the most of your solar panels is to combine them with a solar battery, and create a ‘solar-plus-storage’ system. A solar battery will stock up all the electricity that’s generated during the day (while you’re out), so it’s there for you to use in the evenings.
Other alternatives to the Feed-in Tariff
A handful of energy suppliers have reacted to the conclusion of the Feed-in Tariff with their own tariff systems. While these are all very small-scale schemes, it suggests a bright future of company-led solar power incentives for homeowners. Here are three suppliers who have attempted to bridge the gap while the government has been working on the SEG.
The folks at E.On set up their Solar Reward scheme almost immediately a]er the Feed-in Tariff packed up. They promised to pay 5.24p per kWh of exported electricity to the first 500 customers who install one of their solar PV systems. It’s clearly a fairly limited scheme, and the payments last only one year, but the SEG should be set up by the time these payments finish.
Octopus Energy has responded very impressively to the vanishing of the Feed-in Tariff, setting up a scheme called ‘Outgoing Octopus’. Any customer that signs up will be paid a variable rate (updated half-hourly according to the ever-changing price of energy) for exporting their unused electricity back to the grid. There’s also no end date in sight, so it’s a genuine long-term replacement.
This is very small-scale, but it’s currently something of a test run. The energy supplier is advertising export payments for 50 customers, although the exact rate and end date are both unclear. If all goes well, Bulb will be “ready to scale up”.
Source: The Eco Experts