Homes and businesses will be able to sell excess solar power to the national grid from next January.
Under the Smart Export Guarantee (SEG) energy suppliers with more than 150,000 customers will need to bring in export tariffs. This is a big relief for the solar energy sector, which has been affected by the change in rules this year.
Up to April 1st this year, homes and businesses were paid for excess energy they diverted to the grid through the feed-in tariff (FiT) scheme but the Government ended this. Up to then, for example, around 800,000 householders with solar panels were paid for excess energy. Within a month of the scheme ending, new solar installations fell by 94%.
The new rules, which cover more than 90% of the retail market, also cover wind turbines and other small-scale renewable energy generation, up to a capacity of 5MW. The energy will be tracked by smart meters, and paid by the unit.
The cost of home solar panels are now more than 50% cheaper than eight years ago, according to government figures, which was one reason why it withdrew the FiT scheme. But intensive lobbying and strong reaction from a wide range of groups persuaded it to change its mind.
At the same time, the government now also wants to encourage people to adopt battery storage, as part of the move that supports local generation while helping to create a smarter and more efficient energy system.
Chris Skidmore, Energy and Clean Growth Minister said:
“The future of energy is local and the new smart export guarantee will ensure households that choose to become green energy generators will be guaranteed a payment for electricity supplied to the grid.
“We want the energy market to innovate and it’s encouraging to see some suppliers already offering competitive export tariffs to reduce bills. We want more to follow suit, encouraging small-scale generation without adding to consumer bills, as we move towards a subsidy-free energy system and a net zero emissions economy.”
“These smart export tariffs are game-changing when it comes to harnessing the power of citizens to tackle climate change.
“They mean homes and businesses can be paid for producing clean electricity just like traditional generators, replacing old dirty power stations and pumping more renewable energy into the grid. This will help bring down prices for everyone as we use cheaper power generated locally by our neighbours.”
Energy regulator Ofgem has been tasked with delivering annual reports on how suppliers are responding, including range, nature and uptake of tariffs.
Léonie Greene, a director at the Solar Trade Association, said it was “vital” that even “very small players” were paid a fair price.
“We will be watching the market like a hawk to see if competitive offers come forward that properly value the power that smart solar homes can contribute to the decarbonising electricity grid,” she said.