New 'Smart Export Guarantee' scheme to replace FiTs

Under the proposed SEG, electricity suppliers would pay new small-scale energy producers for excess electricity from homes and businesses being put back into the energy grid. The new scheme could create a whole new market, says the government, encouraging suppliers to competitively bid for this electricity and giving exporters the best market price while providing the local grid with more green energy. It could also unlock greater choice for solar households over buying and selling their electricity, says the Department for Business, Energy and Industrial Strategy (BEIS).

BEIS adds that, with the cost of solar power falling by 80% since 2008, it’s the right time to review the way these payments are made. The SEG would mean households and businesses installing new renewable energy generators would be paid transparently for the energy they produce.

Currently under the FiT scheme, accredited households and businesses which install small-scale electricity generation are assumed to export 50% of the electricity they produce and are paid for it – even when the electricity is not needed by the grid or they export less than 50%. 

The consultation proposals, combined with existing technologies such as smart meters and battery storage could also help build a bridge to smarter, more efficient energy systems of the future, with the potential to work together with electric vehicle and standalone batteries to store and sell electricity to the grid when demand is high.

The FiT scheme, which closes to new applicants at the end of March, has overachieved on its original objectives, says BEIS, outstripping installation predictions by nearly 100,000 and with over 830,000 solar installations producing enough power for two million homes.

The Solar Trade Association CEO Chris Hewett said: ‘We give these proposals a cautious welcome. We are very pleased the government is unequivocal; small generators will be compensated for the power they contribute to the system, but the issue remains providing remuneration at a fair market rate.’