The Smart Export Guarantee: what small businesses need to know

The SEG scheme is designed to encourage new small-scale renewable electricity projects.

Solar panels sit on the roofs of a row of buildings beside a canal.

The Smart Export Guarantee (SEG) scheme is designed to encourage new small-scale renewable electricity projects, but many small businesses may not know how they could benefit. Here are the key points you need to know.

Generators are now guaranteed payment

SEG replaces the Feed-In Tariff, which closed to new applicants in 2019. It means that small-scale renewables generators are guaranteed payment for any electricity they export to the grid, provided that they meet the conditions of the scheme. This is because the scheme obliges all licensed electricity suppliers in the UK over a certain size to offer a tariff to any eligible generator. SEG is specifically aimed at smaller installations; the renewable electricity system must be under 5MW. This presents an opportunity for businesses who aren’t in the energy business but are considering on-site generation as an extra revenue stream.

The supplier sets the price – but it can’t be negative

Although energy suppliers are obliged to offer a tariff to any eligible electricity generator, they are free to set the price as high or low as they like. However, even though wholesale electricity prices sometimes go below zero, the supplier can’t set a negative price for the electricity it buys; the price must be more than 0p. This means there’s no risk that the generator will have to pay for what they export.

SEG covers a range of technologies

When we think of small-scale electricity generators we usually think of solar photovoltaic panels, but but the Smart Export Guarantee applies to a range of renewable energy technologies as well as solar:

  • Solar PV
  • Wind power
  • Micro combined heat & power
  • Hydro power
  • Anaerobic digestion

Not all suppliers have to offer you a tariff

Smaller suppliers (those with fewer than 150,000 customers) are not obliged by the Smart Export Guarantee to offer generators a tariff, although they can choose to opt in to the scheme if they wish.

You don’t have to go with your import supplier

Energy generators don’t have to choose a SEG tariff with the supplier who sells them the energy they use. Smart meters are capable of measuring the electricity exported by your business separately from the electricity it consumes, so your business is free to treat them separately and simply choose the best export tariff on offer. However, there may be incentives to stick with the same supplier for both import and export; for example, some may offer a better export tariff if you are also buying electricity from them.

It may be hard to choose a SEG tariff

Different suppliers will offer different prices for the electricity they buy from you. But it’s not a simple matter of picking who pays the most, because tariffs have different structures. Some will offer a fixed-rate SEG tariff, where you get paid the same for every unit of electricity you export, and some will offer a flexible-rate tariff that changes with the changing cost of electricity. You may even be offered different tariffs from the same supplier.

Good Energy is currently developing a straightforward and competitive tariff: sign up to find out more.

You’ll need a smart meter

Getting paid for exporting electricity under SEG means that you need a meter which can provide half-hourly readings. In practice, this means a smart meter. Often, the export supplier that you have chosen will install a smart meter for you, but some don’t have the capacity. The latest generation of smart meters aren’t tied to any specific supplier, so it’s entirely possible to get one supplier to install your meter and then sell your energy to a different supplier.

Good Energy is currently trialling a meter installation service as part of developing our SEG offer for small businesses. We want to ensure that we are offering the best possible experience for our SEG export partners before rolling it out, but once our SEG offer goes live, smart meter installation will come as standard.

You can turn a surplus into an income stream

For most businesses, the main driver to explore on-site generation is the potential for significant savings on energy bills, as well as reducing your carbon footprint. But if you generate more power than you can use, SEG represents a potential income stream. Because this is a relatively new and developing area, the range of export tariffs on offer from suppliers is continually changing. Good Energy is working on its own export tariff that will offer a generators a fair deal.

If you’d like to know more about the fair and competitive SEG tariff we are developing, you can register for updates here.

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