Last edited 21 Jul 2021

Smart Export Guarantee SEG


Microgeneration is the small-scale generation of heat and electric power by individuals, small businesses and communities to meet their own needs, as alternatives or supplements to traditional, centralised grid-connected power.


[edit] Introduction

The Smart Export Guarantee (SEG) is a government-backed programme that became available on 1 January 2020. The SEG initiative was introduced in conjunction with the phase out of the Feed-in Tariff (FIT) programme, which was discontinued for new applicants on 31 March 2019.

[edit] Background

The SEG was brought forward by the Department of Business Energy and Industrial Strategy (BEIS) on 10 June 2019. It was introduced by the Smart Export Guarantee Order 2019 - which amended the electricity Supply Licence Conditions (SLCs).

The SEG requires licensed suppliers (referred to as SEG licensees) with at least 150,000 domestic electricity customers to offer at least one SEG compliant tariff to any eligible generators (referred to as SEG generators). Other suppliers may participate on a voluntary basis. A list of mandatory and voluntary SEG licensees is available from the Ofgem site.

To confirm their status, all licensed electricity suppliers must notify Ofgem by 14 February each year. The status of a supplier then applies for the duration of the relevant SEG year (1 April - 31 March).

The announcement from Ofgem explained that the SEG would act as an incentive for both domestic and commercial energy generators able to export electricity up to a capacity of five megawatts (MW) - or up to 50kW for micro-combined heat and power - to the grid. Eligible small-scale low-carbon generators include:

In order to be eligible, generation technology must be installed within Great Britain.

[edit] Payment arrangements

The SEG requires licensees to pay small scale generators for low-carbon electricity which they export back to the National Grid. This arrangement is permitted provided the parties satisfy the rest of the eligibility criteria. For more information, see Guidance for SEG Licensees and Smart Export Guarantee: Guidance for generators.

Licensees dictate the payment rate, the contract length and other terms for generators. There is no prescribed tariff rate, type or length, but the tariff must offer an above zero pence rate per kilowatt hour (kWh) of export at all times in order to be compliant.

SEG generators are paid an export tariff which serves as reimbursement for the electricity that is exported back to the National Grid.

[edit] SEG v FIT

Both the SEG and FIT were introduced to promote commercial and residential investment in renewable microgeneration technology. But the SEG does not directly replace FIT.

One significant difference is that FIT pays for energy generation and export; the SEG only pays for exported energy. However, some licensees do permit generation arrangements to stay in place when generators sign up for the SEG tariff.

Another difference is tariff rate determination. Under FIT, this rate was dictated by Ofgem. With the SEG, it is the licensee that determines this rate.

Those who signed up to FIT prior to its discontinuation in 2019 will continue to receive payments for the duration of their contract.

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[edit] External resources

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