Payments by suppliers for renewable power sold to the grid from small scale installations will in future be metered rather than based on a flat rate, the government announced as it resurrected the export tariff today (8 January).
Energy minister Claire Perry announced today during the House of Commons Business, Energy and Industrial Strategy (BEIS) oral question time that the department has published proposals to replace the export tariff which compensates small scale generators for surplus electricity exported to the grid.
The government sparked consternation last summer by announcing the withdrawal this March of the small-scale renewables export tariff, alongside the feed-in tariff (FIT), without proposing a replacement.
Critics said that the absence of a payment mechanism would force households and small businesses that install solar PV panels, the most common form of small-scale renewable device, to provide suppliers with free electricity.
However while pressing ahead with scrapping the FIT scheme, which paid for all electricity generated by small-scale devices, BEIS has today unveiled a new scheme that will enable surplus power to be sold.
Like the existing export tariff, the smart export guarantee (SEG) will require suppliers to remunerate small-scale low-carbon generators.
Those operating renewable installations up to 5MW in capacity will be eligible for renumeration.
As with the existing scheme, larger electricity suppliers with more than 250,000 domestic electricity supply customers will be obliged to offer small-scale generators a price per kWh for electricity they export to the grid.
But unlike the existing tariff, electricity exported to the grid from eligible generators must be metered rather than paid on a flat rate.
And there will not be a guaranteed price for generators. Suppliers will determine the tariff per kWh and the length of the contract with the caveat that generators will not have to remunerate suppliers at times when electricity prices drop below zero.
Suppliers would be obliged to provide at least one export tariff.
Smaller suppliers can opt to voluntarily provide a tariff under the SEG and no levelisation of costs is proposed.
The consultation on the government’s proposals is set to close on the 5 March 2019.
James Court, director of policy and external affairs at the Renewable Energy Association said the government’s proposals mark the beginning of a new era of subsidy free small-scale renewable generation.
He said: “These proposals could usher in a new era for small-scale renewables and offer a subsidy free means for homeowners and businesses to generate their own low-cost, low-carbon electricity.
“It was clear that no-one should be asked to give away electricity for free, and we strongly advocated for a market based solution and are pleased this approach has been adopted. Whilst the details around the transition from the former subsidy scheme will be important, this signal of support for the sector from government will help our members continue to provide smarter, cleaner and cheaper electricity in the decade to come.”
Solar Trade Association chief executive Chris Hewett added: “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.
“This is a good basis for consultation. The devil really is in the detail here so we very much hope that government will listen very carefully to the responses to this consultation, as they were urged to do by Douglas Ross MP at BEIS orals today.”
Simon Daniel, chief executive of smart home battery company Moixa, said: “The introduction of this scheme will help to ensure the continued success of domestic solar in the UK, which is hugely important for delivering on our decarbonisation targets.
“The smart export guarantee will also boost the uptake of smart home energy storage systems, as they will enable users to maximise their financial returns by storing energy until they can get the best possible price.
“We are looking forward to engaging with the government as this policy develops to ensure it has the best possible impact on the future of the UK’s green economy.”