Smart Export Guarantee explained

The Smart Export Guarantee (SEG) pays customers for renewable electricity they have generated and put into the grid. 

It replaced the Feed-in Tariff (FIT) scheme in 2020. The FIT scheme also pays many solar panel owners for the electricity they generate at home. 

Big energy companies have had to participate in the SEG since it launched at the beginning of 2020.

Read on to find out if you can get a SEG tariff for your home's renewable energy system, and how much you could earn.

Find out more: How much do solar panels cost? 

What is the Smart Export Guarantee?

The Smart Export Guarantee pays households for the excess renewable electricity they generate but don’t use themselves. The electricity can be produced by the following renewable technologies:

• solar panels (pv)
• wind
• hydro
• micro combined heat and power
• anaerobic digestion.

The government said that homes putting excess renewable electricity into the grid are guaranteed payment for it under the new scheme. But you have to sign up to a SEG tariff with a company, otherwise you won’t get paid for your surplus electricity and will export any you generate but don’t use to the National Grid for free.

According to energy regulator Ofgem, during 2021-22:

• 36 SEG tariffs were offered by 12 providers
• 34,020 installations were registered to a SEG tariff, with a total generation capacity of 156MW – enough to power 36,562 three-bedroom houses for a year
• £1.67m in payments were made to SEG generators, compared with £114,480 in 2020-21
• 24GWh of electricity was exported through the SEG – enough to make around 586 million cups of tea.

How much could I earn with solar panels and the Smart Export Guarantee?

Installing renewable generation technology and signing up to a SEG tariff will help you use more renewable electricity and should help you save money on it in the long term. However, it’s unlikely that you’ll be able to make as much money from the SEG as some solar panel owners initially could from the FIT.

This is because the SEG pays only for excess electricity put into the grid, rather than all the electricity that's generated.

Companies set their own SEG tariff prices, so you’ll need to shop around to make sure you get a price you’re happy with. Companies must pay more than zero, but there can be big differences between the best and the worst. 

When we checked widely available tariffs in April 2023, we found companies paying between 1p/kWh and 15p/kWh (or even as much as an average 35.5p/kWh during peak hours with Octopus Energy's new Flux tariff).

This means a 15-fold difference in your payments, which would add up to a significant amount over a year if you exported 1,500kWh to the grid:

• Highest SEG rate – £225

• Lowest SEG rate – £15

For context, a 4kWp solar system could generate 3,410kWh electricity in a year. The amount you export depends on how much of the energy you generate you use. The average medium-use household uses 2,900kWh electricity over a year so you could end up exporting a lot less than this, especially if you're at home all day as you would use more than if you were out for some of it.

On top of this, you would expect to save money on your electricity bill as you’d be using renewable power generated at home and therefore buying less from the grid. As illustrated below, you may even save more from having to buy less from the grid than you could earn from exporting the excess electricity you generate.

Your individual bill savings and SEG earnings will depend on:

• how much electricity you export to the grid
• your export tariff rates
• time of export (if the SEG has a time-variable rate)
• how much of the electricity you use yourself
• the price you pay for electricity
• how much time you spend at home.

So if you’re considering installing renewable generation, take these into account against the cost of installing the system and maintenance costs to work out how long it’ll take your system to pay for itself.

Find out more about solar PV maintenance.

If you fit a home battery, you’ll be able to store and use more of the electricity you have generated, helping you save more on your electricity bill. However, different tariffs have different rules around whether they’ll pay for electricity stored in a battery, especially if some of it could be ‘brown’ electricity from the grid.

Check what your chosen SEG company’s rules are. If it will pay for stored electricity then you could earn more with a flexible tariff by storing electricity to export at times when rates are higher. But you’ll also need to take into account the initial cost of the battery.

Read more about solar panels and energy storage.

Which companies have Smart Export Guarantee tariffs?

All companies with more than 150,000 customers have to offer a SEG tariff. Smaller companies can choose to do so and some companies besides traditional energy companies have offered tariffs as well, such as Tesla, so look out for different options available.

The biggest energy companies all offer SEG tariffs. Other companies with SEG customers include E, Shell Energy, Utilita and Utility Warehouse.

Companies with more than 150,000 customers must offer at least one SEG tariff that is export-only, and therefore available to all eligible generators, not just their customers. 

That means you can choose a different supplier to sell your renewable electricity to than the one that you buy electricity from.

However some firms will pay for your exports into your energy account with them if you are a customer, which might be convenient. 

Some tariffs offer a better export rate if you buy your energy from the same company, including the one from Octopus Energy used in our calculations above. 

Some companies have better exclusive rates if you installed your solar panels and/or battery through it, such as the tariff from Scottish Power above.

Battery-specific SEG tariffs

Electric car giant Tesla previously sold a SEG tariff, administered by Octopus Energy, that required you to have a specific storage battery. 

When this tariff was available in 2021, it paid the highest export rates. But to access it you needed to have Tesla's Powerwall battery installed.

Tesla's SEG tariff was for homes with solar panels and its Powerwall electricity storage battery installed. You had to buy electricity via the plan too, at the same rate as for exporting energy. 

The rate for Tesla vehicle owners (with an EV charger installed at their home) was lower than for those without a Tesla vehicle. The tariff – called Tesla Energy Plan – was closed to new applicants in early 2023.

Types of Smart Export Guarantee tariff

So far, we’ve seen two main types of Smart Export Guarantee tariffs:

• fixed rate
• flexible rate.

Fixed rate SEGs have a set amount that they pay per kilowatt hour of electricity you export to the grid, regardless of when you export it. Most of the SEG tariffs on offer at the moment follow this pattern.

Flexible rate SEGs pay varying amounts depending on how valuable the electricity is to the system at different times. For example, they may be tied to day-ahead wholesale prices. So you'll be paid more for exporting electricity at a time when there is a high demand for it (in the evening, for instance). Octopus Energy’s Outgoing Agile tariff is this type.

Companies might also offer multi-rate SEGs where there are different set rates for electricity exported at different times, such as day and night rates, or weekday and weekend rates, such as with Octopus's Flux tariff for those with solar panels and a storage battery.

The price you are paid must not be below zero at any time.

To complicate things, some companies are offering tariffs where the price (per kWh of electricity) is fixed for the duration of the contract, while others are offering variable rates. A variable rate means they can change the price of the tariff depending on whether they want to pay more or less for your electricity. You should be given 30 days’ notice though.

Can I get a Smart Export Guarantee tariff?

If you install solar panels, a wind turbine, or other renewable generation at home, you should be able to sign up to a SEG tariff.

You’ll need to meet certain criteria though, including the following:

• Your installation must be 5MW capacity or less (50kW for micro-CHP).
• You’ll need a meter that can provide half-hourly readings for electricity export.
• Your installation must be MCS-certified.

In practice, to provide half-hourly meter readings it's likely that you will need a smart meter. Although the government told us that it’s ‘still possible to enjoy the benefits of SEG without a smart meter’, you’ll need more than a traditional electricity meter because these cannot take half-hourly readings. Some advanced meters can do this or ‘any other type of export meter’, according to the government, but you’ll need to get one of these installed. 

Find out more: what you need to know about smart meters

However, we’ve heard from Which? members who have been refused smart meters because of their solar panels. So make sure that you get a second-generation smart meter that can take export meter readings if you’re considering installing renewable technology.

MCS certification involves choosing a product and using an installer that are approved by the microgeneration certification scheme (MCS). This is a quality-assurance scheme for renewable technologies, meaning that companies and products meet high standards. Find out more about the MCS here.

If you have installed solar panels or another renewable system since the FIT closed, you should be able to sign up with a supplier offering SEG payments as long as you meet the criteria. You won’t be able to claim back payments from before you signed up to a SEG tariff though.

What is the difference between the Smart Export Guarantee and feed-in tariff?

The FIT paid households that produced their own electricity using renewable technologies. It closed to new applicants at the end of March 2019.

If you receive the FIT, you get two payments:

Generation tariff

• A payment for the total amount of electricity generated, calculated per unit.

Export tariff

• A payment for the units of electricity exported to the National Grid, assumed to be 50% of the amount you generate.

The SEG is one payment and is just for the electricity you export to the grid.

SEG payments are based on the measured amount of electricity exported to the grid. FIT payments were ‘deemed’ or estimated to be 50% of the total electricity generated.

The payment rates for the FIT were set by Ofgem and the government and were the same regardless of which supplier paid you. SEG tariff rates are set by the companies that offer them.

The FIT was paid for by a levy on all customers’ energy bills. The SEG is paid by energy companies who buy the power.

I already get the FIT. Should I change to the SEG?

If you're already signed up to receive FIT payments, you will continue to do so for the remainder of your contract (usually around 20 years). The SEG is aimed more at new renewable technology owners.

The FIT rates were very generous when the scheme first launched so it’s unlikely that you will earn as much from switching to a SEG tariff compared with your feed-in tariff.

SEG tariffs will pay you only for the exact amount of electricity you export, whereas feed-in tariffs estimated your export at 50% of what your system generated – meaning that if you used more than 50% of your electricity you’d be even better off.

However, if you opt out of receiving your FIT export payments, you can sign up to get SEG export payments instead.