The Smart Export Guarantee (SEG) explained

The Smart Export Guarantee (SEG) came into effect on 1st January 2020, replacing the Feed-in Tariff (FiT). These schemes offered payments to businesses with installed onsite generation, a vital part of the UK’s journey to net zero.

Onsite generation can offer businesses various benefits, including self-sufficiency and environmental sustainability – and as the technology becomes less expensive and more efficient, the advantages will only increase. While these green solutions are not suitable for every business, they are becoming more prevalent in this time of economic recovery.

Here are some FAQs regarding the new scheme and how it works:

What is the Smart Export Guarantee (SEG)?

The SEG offers payment to small-scale renewable energy generators for excess electricity that is exported to the National Grid. To do this, suppliers with at least 150,000 domestic customers will be required to provide a minimum of one tariff offer to small-scale low-carbon generators.

Do I need to apply for the Smart Export Guarantee?

If you are a small-scale energy generator with either solar PV, wind, CHP, Hydro, or Anaerobic digestion, installed in England, Scotland or Wales with a capacity up to 5MW (or up to 50kW for micro-CHP), you may fit the criteria for the SEG.

For next steps and more info download our SEG Guide

What if I already get the Feed-in Tariff (FiT)?

If you signed up for FiT before the 31 March 2019 deadline, your payments will continue until your contract runs out. The SEG is mostly for companies or households with new renewable energy installations, or for those who missed the FiT deadline.

There is no FiT subsidy for newly installed renewable energy technologies after this date. Backdated applications will also not be accepted.

What is the difference between SEG and FiT?

Whilst the SEG is replacing the Feed-in Tariff, there are differences between the two schemes. The Feed-in Tariff included both export and generation tariffs, but the SEG only provides the former. In other words, with the SEG you will only receive tariffs for the renewable energy you don’t use. This means that customers may not see the same financial benefit for the renewable energy they are generating as solar panel owners initially did with FiT. (Tariffs will vary across regions depending on network requirements.)

There is also a scheme for renewable heat technologies for both domestic and non-domestic purposes, known as the RHI and non-domestic RHI. This government scheme provides financial incentives for the installation of renewable heat technologies. Eligible technologies include biomass heat, solar thermal and heat pumps.

How do I know if on-site generation is right for my business?

On-site generation can often provide energy security: a worthwhile commodity in a volatile market. It can also help businesses avoid non-commodity costs, which can make up almost 60% of your energy bills.

At EIC, we already support our clients with initiatives that incentivise clean energy use, assisting clients with navigating the transition to a net zero landscape. We can help guide you towards the most efficient and cost-effective energy management plan. This can mean exploring on-site generation options, as well as other sustainable solutions that can reduce your carbon emissions and energy costs.

For businesses that have set or plan on committing to a net zero target, EIC would be happy to engage with you. Our carbon team works with businesses to put together an adaptable and bespoke roadmap, outlining the sustainable steps required to reduce your carbon footprint. Along the way, we will ensure you stay compliant with changing legislation, allowing you to make the most of schemes such as the SEG.

To understand more about our energy and carbon services contact us at EIC.

Could your organisation benefit from onsite generation?

Access to clean electricity is becoming increasingly important for UK businesses. Onsite generation can provide a source of clean energy, whilst also protecting firms from supply chain disruptions and market changes. We break down the major benefits of generating your own electricity, as well as the advantages it will grant businesses on the road to net zero.

Onsite generation: What do you have to gain?

The immediate boons of onsite generation fall under three categories: energy security, increased flexibility, and a heightened reputation for corporate social responsibility.

Energy security

Energy security can be defined in two ways; the first is the physical security of the resource reaching your business from supply. Fortunately, UK supplies are relatively undisturbed by inclement weather conditions compared with other regions of the world. Despite this, any total loss of energy – no matter how brief – can be costly. This can be avoided by having a safeguard like onsite generation in place.

The second security threat refers more to the commercial landscape than the physical one. Energy wholesale contract prices are subject to change at the best of times. Depending on a variety of factors like peak demand times, supply chain disruption, or, in the case of big oil earlier this year, complete loss of demand.

2018 was a stark example of how sudden and dramatic these price changes can be. In just a six-month period, between March and September, winter electricity contract prices increased by over 40%.

The fact is that the majority of this price hike was due to non-commodity costs like transmission and distribution. These are practically absent when generating onsite, meaning you are less at the mercy of market changes.

Increased flexibility

As with supply security, onsite generation gives you greater control over all aspects of your energy usage. You can scale back your reliance on the grid during high-generation days and, when combined with your own battery storage, even remove your dependence on the grid completely. In a way this gives you the best of both worlds. It removes your attachment to swings in the market but allows you to use the grid as a safety net for low-generation periods.

UK manufacturing has already seen huge gains by combining generation and battery storage technology. A 2018 report from CBS indicated that this sector alone could save over £500m annually by adopting such systems.

Installing your own generation equipment also makes it easier to scale and budget your energy needs as your business grows. Moreover, it improves the value of your business real estate by turning passive roof space into an asset.

Improve your green reputation

Corporate social responsibility is climbing the priorities list of commercial businesses. Onsite energy generation is an excellent way to demonstrate your commitment to reducing your carbon footprint. It also shows your allegiance with a growing section of the energy industry – one that will be centre stage for the global fight against climate change.

Additionally, most UK firms will be required to uphold TCFD standards of reporting the potential risks climate change poses to their functionality. Potential investors will feel confident knowing that you are not only bolstering your own energy supply but actively reducing your contribution to climate change.

Finally, your customers will thank you and new customers will seek you out for reflecting their values. Research conducted in 2020 showed that out of 10,000 global respondents, 50% say they only buy products from brands that ‘try to be eco-friendly’.

Beginning onsite generation and other considerations

At EIC, we provide guidance on the installation and integration of onsite generation into your business model. We recognise the value of such technologies in isolation. However, we also believe that parallel technology working in tandem can release even greater returns for you.

As such, alongside battery storage and onsite generation options we also offer intelligent energy management services. After all, it would be a shame to make savings from your own energy generation and then lose them to inefficiency. To find out more about these services and how they can work for you, get in touch.