Since the installation of the first 30kWp photovoltaic (PV) system by BP Solar in 1984, the UK has a history of approximately 40 years in PV electricity generation. Before the introduction of the Feed-in Tariffs (FiTs) incentive policy in 2010, the UK had a small PV installation capacity of around 36MWp. To encourage the adoption of PV systems, the UK government has implemented two main incentive policies: Feed-in Tariffs (2010-2019) and Smart Export Guarantee (2020-present).
Feed-in Tariffs (FiTs):
The Feed-in Tariffs (Specified Maximum Capacity and Functions) Order 2010, implemented in April 2010, offered incentives for rooftop PV installations with a capacity of less than 5MW. The policy provided rewards based on the generated electricity, with additional incentives for surplus electricity exported to the grid. The duration of the incentives was set at 25 years (for applications before August 2012) or 20 years.
Incentives and Savings under FiTs:
Under FiTs, there were three main components: generation tariff, export tariff, and savings on electricity bills.
1. Generation tariff: This component rewarded PV system owners based on the amount of electricity generated.
2. Export tariff: PV system owners received incentives based on the amount of surplus electricity exported to the grid, assuming a self-consumption ratio of 50% due to limited smart meter adoption.
3. Savings on electricity bills: By using self-generated electricity from rooftop PV systems, owners could reduce their reliance on purchasing electricity from energy companies, resulting in lower electricity bills.
FiTs Incentive Levels:
The incentive levels varied based on the year and type of PV project. For example:
– In 2011, the tariff rate ranged from 37.8 to 43.3 pence/kWh.
– Different PV projects had different tariff rates, such as 19 pence/kWh for standalone installations and 21 pence/kWh for building-mounted installations, according to the August 2012 standards.
– The tariff rates were adjusted annually, gradually reducing over time.
Smart Export Guarantee (SEG):
With the termination of FiTs in March 2019, the UK government introduced the Smart Export Guarantee (SEG) in January 2020, as part of its renewable energy feed-in tariff scheme.
Which technologies are eligible for the SEG?
The Smart Export Guarantee (SEG) covers five approved low-carbon technology types. If you have any of these technologies installed, you could potentially take advantage of the SEG:
- Solar Photovoltaic (Solar PV): Solar PV systems are eligible.
- Wind: Wind energy installations are also included.
- Micro Combined Heat and Power (Micro-CHP): Micro-CHP systems are part of the SEG.
- Hydro: Hydroelectric power installations are eligible.
- Anaerobic Digestion (AD): Anaerobic digestion systems are recognized under the SEG.
These eligible installations must be situated in Great Britain and adhere to specific capacity limits, with a total installed capacity (TIC) not exceeding 5MW, except for micro-CHP, which should have a TIC of no more than 50kW.
Differences between SEG and FiTs:
1. FiTs provided incentives for both generated and exported electricity, whereas SEG only offers incentives for exported electricity.
2. FiTs were based on estimated 50% of the total generated electricity, while SEG relies on actual metered data for payment calculations.
3. The costs of FiTs were borne by Ofgem and the government, regardless of the energy company, whereas SEG allows each energy company to determine their own tariff rates.
4. FiTs were paid through customers’ energy bills, while SEG payments are made by the energy companies themselves.
SEG Tariff Levels:
As of August 2023, thirteen energy companies have announced their SEG tariff rates, with the highest to lowest rates as follows:
1. Octopus: High SEG tariff rates.
2. Scottish Power: Competitive SEG tariff rates.
3. EDF: Attractive SEG tariff rates.
4. E.ON: Favorable SEG tariff rates.
The Smart Export Guarantee (SEG) introduces a fresh approach to compensate you for your power. If you possess a solar PV system and produce excess power beyond your requirements, this surplus is fed into the grid. Within the Smart Export Guarantee framework, energy providers compensate you for each unit of power you contribute to the grid.
The Solar Energy UK website presents an updated compilation of ongoing solar energy deals.
Is SEG Incentive Tax-free?
Under certain conditions, SEG incentives are tax-free.
How to apply for the Smart Export Guarantee (SEG)?
To initiate your application for the Smart Export Guarantee (SEG) and start earning from the electricity you export to the National Grid, follow these steps:
- Identify Suitable SEG Licensees: Conduct research to identify SEG licensees—these are electricity providers offering SEG tariffs. You can find a list of these suppliers on the Solar Energy UK website or through credible sources.
- Choose an SEG Licensee: Select an SEG licensee that aligns with your preferences and requirements. Ensure they offer terms and rates that meet your expectations.
- Visit the Licensee’s Website: Visit the website of your chosen SEG licensee to gather detailed information about their SEG tariff and the application process.
- Review Application Instructions: Thoroughly read through the SEG application process outlined on the licensee’s website. Understand the prerequisites, required documentation, and any specific information necessary for a successful application.
- Complete the Application Form: Accurately and comprehensively fill out the application form provided by the SEG licensee. Submit any documents or information as specified in the application process.
- Await Application Processing: Allow the SEG licensee time to process your application. They will confirm your acceptance into the SEG program.
- Commence SEG Payments: Once approved, you will begin receiving payments for the electricity you export to the National Grid, adhering to the terms specified in the SEG tariff.
Remember, the SEG payments, including amount and contract length, will be determined by the chosen SEG licensee. Payments will be based on your actual meter readings, even if some suppliers offer alternative payment models. It’s essential to ensure that the SEG tariff you are offered remains above zero. Furthermore, your SEG licensee doesn’t need to be the same company as your current energy supplier. You have the flexibility to choose different companies for SEG payments, electricity supply, and gas supply if you wish.
How much can I get from SEG?
Use the Energy Saving Trust calculator to estimate::
- The potential savings achievable through solar panels or alternative renewable electricity generation systems.
- The potential earnings from selling surplus energy back to the grid.
While you won’t receive payment for the electricity you consume, you will still save on costs by reducing your grid energy imports.
Conclusion:
The UK government’s implementation of Feed-in Tariffs and Smart Export Guarantee has incentivized the installation of rooftop photovoltaic systems. These policies provide monetary rewards for the generated and exported electricity and offer potential savings on electricity bills. The Smart Export Guarantee, in particular, allows customers to choose from a range of energy companies offering varying tariff rates. These initiatives are essential steps towards a more sustainable and renewable energy future in the UK.
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