UK Government's Smart Export Guarantee to stabilise small-scale renewables market
The Government's replacement initiative for the Feed-in Tariff (FiTs) scheme for residential and business-owned solar has been introduced today (10 June), ensuring that users will be paid for electricity they send to the grid.
The Smart Export Guarantee (SEG) was officially introduced today (10 June), to ensure that businesses and residents creating and exporting solar electricity to the grid will be guaranteed payments, under law, from suppliers.
The SEG will ensure that small-scale electricity generators that install solar, and other forms of renewable generation up to 5MW in capacity are paid for each unit of electricity they sell to the grid. Units will be tracked by smart meters.
SEG builds on the FiT scheme, which supported the installation of 850,000 small-scale renewable projects, while driving down the cost of residential solar panels which are now more than 50% cheaper compared to 2011.
Energy and Clean Growth Minister, Chris Skidmore, 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."
SEG places a legal obligation onto energy suppliers that have more than 150,000 customers and therefore covers 90% of the retail market. These suppliers have until January 2020 to introduce export tariffs.
Launched in 2010, the FiT scheme provides payments to owners of small-scale renewable generators at a fixed rate per unit of electricity produced, enabling the cost of installation to be recouped. It has been one of the key factors contributing to the huge increase in solar photovoltaic deployment from 100MW in January 2010 to 12.7GW at the end of 2017, of which 4.8GW is supported by FITs. The FiT scheme closed to new entrants on 31 March 2019.
According to Green Alliance, the closure of the programme meant that 30 community projects totalling 4MW capacity missed out on FiT contracts. A further 77 private and public sector renewable schemes, totalling 32MW of solar and 21MW of wind, were also expected to not get FiT contracts.
This trend, Green Alliance claims, could leave many of the organisations behind these projects with “redundant business models”, forcing them to abandon construction.
In January, the UK Government made a U-turn on its decision to end the solar "export tariff", confirming that households which install solar panels in the future will be paid for excess power they generate and send to the grid.
Commenting on the SEG, the Solar Trade Association’s director of advocacy and new markets Léonie Greene said: "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.
“The net-zero energy transition we need cannot happen without the active engagement of the public so it is vital that, as very small players, they are treated fairly in a very big system. It is a requirement under EU law to offer fair, market-rate payment for small-scale solar power exports and government has decided to leave this to a market that it does not trust to supply power at a fair price.”
The Renewable Energy Association's chief executive Dr Nina Skorupska said: “Small scale renewable power deployment is good for businesses, good for homes, and good for our climate. The Government confirming that they will legislate for a Smart Export Guarantee is very positive and acknowledges innovation in the market, how the falling price of batteries and renewable energy can support lower bills, and how local generation and storage can reduce grid constraints.
“Whilst we are fully supportive of encouraging innovation in tariff design we still believe that the policy should introduce a fair minimum price for generators. Minimum contract lengths should be required to give future generators certainty. These proposals do not ensure this."