The replacement for the feed-in tariff scheme, which closed to new applicants in March, is expected to come into effect by the end of 2019, the government has announced.
The smart export guarantee (SEG) will require all suppliers with more than 150,000 domestic customers to provide at least one export for small-scale renewable generators.
The scheme will be open to anaerobic digestion, hydro and micro-combined heat and power installations with a capacity of 50kW or less and onshore wind and solar photovoltaic installations with a capacity of up to 5MW.
Responding to a consultation published in January, the Department for Business, Energy and Industrial Strategy (BEIS) said the only stipulation regarding the payment rate is that it must be “greater than zero at all times of export”.
Suppliers will be free to choose the form of tariff they offer. “This will allow for relatively simple tariff offers to be implemented quickly, with an expectation that with time increasingly smart approaches will be implemented,” the department explained. They will not be obliged to purchase power exported from co-located storage.
To be eligible, generators must have a meter capable of reporting exports on a half-hourly basis, although the scheme does not require half-hourly readings. Suppliers must be satisfied that their installations are safe and will also need to ensure that those using anaerobic digestion meet sustainability criteria and feedstock requirements as verified by Ofgem.
The government does not intend to create a central register of SEG installations on the grounds this would “create additional burdens while offering limited benefits” but will ask Ofgem to report annually on the “range, nature and uptake” of tariffs being offered. “If we consider that insufficient progress is being made, we will consult on reviewing the operation of the SEG,” added BEIS.
The scheme will be implemented through changes to supply licence conditions and new secondary legislation, which will be laid before parliament today (10 June).
Interim 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.”
Among the suppliers already offering an export tariff is Octopus Energy. Its chief executive Greg Jackson said: “These smart export tariffs are game changing when it comes to harnessing the power of citizens to tackle climate change.
“They mean homes and businesses can be paid for producing clean electricity just like traditional generators, replacing old dirty power stations and pumping more renewable energy into the grid. This will help bring down prices for everyone as we use cheaper power generated locally by our neighbours.”
Léonie Greene, director of advocacy and new markets at the Solar Trade Association (STA) 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 STA praised Octopus Energy for offering “the first truly smart export tariff” but raised concerns over its decision to limit access to its supply customers: “If other suppliers follow this format, there is a risk of consumers being saddled with opaque package deals that cloak the true economics of household power use and supply.
“Furthermore, this offer only applies to the domestic market. Since April 2019, small-scale commercial and community energy generators have been left with no route to market.”