PRESS RELEASE: Industry responds to Smart Export Guarantee announcement

Solar Trade Association
Immediate Release
10 June 2019

Today the government published its final proposals for the long-awaited Smart Export Guarantee (SEG) [1] following a sustained campaign coordinated by the STA over the last nine months in response to the withdrawal of the Export Tariff. By the 1st January 2020 qualifying suppliers with more than 150,000 retail customers will be legally required to offer terms of payment for the surplus power that new solar homes put on the grid. Smaller suppliers are also able to offer a Smart Export Guarantee on a voluntary basis.

Many elements in the SEG represent a hard-fought win for the STA and industry:

  • The door has been kept open for power exported from co-located battery storage to also be remunerated
  • The mechanism is simple, and enables suppliers to structure tariffs how they see best
  • Installation standards will be safeguarded through a requirement that systems be demonstrated to suppliers that they are MCS certified or equivalent

However, crucial to the success of the SEG policy will be ‘meaningful and innovative’ offers. The STA wants to see a competitive market develop to purchase power from smart, solar homes at a fair market price. It will be watching the market very closely for developments and ranking all offers via its online Smart Export Guarantee league table, so that new solar households can easily understand which companies are making the best offers. [2] Currently only Octopus Energy, on a voluntary basis, has a tariff for solar exports, for which it is offering a fair market rate. [3]

STA Director of Advocacy and New Markets Léonie Greene 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.

Nevertheless we are hopeful that there are innovative electricity supply companies who understand the importance of incentivising homeowners who want to install solar, battery storage and EV charging as we move towards a smart energy system. Barriers still need to be resolved and it is incumbent on government to remove these to encourage as thriving and competitive a market as possible, including for aggregators.”

Government has indicated that whilst no minimum floor price has been set it will be ‘actively monitoring the development on this market’ and will consider setting arrangements if further intervention is required, such as if generators are not able ‘to access a competitive range of export tariff options’. It has cited the current trials and one existing domestic offer linked to the wholesale price as an encouraging signal that suppliers can offer ‘meaningful and competitive offerings’.

The STA would expect offers below this to be indicative of an uncompetitive, insubstantial market which requires intervention. Innovative supplier Octopus Energy have already taken steps towards meeting the requirements of the SEG with the first truly ‘smart’ export tariff offer, which includes both a simple fixed payment for all surplus power exported to the grid at a fair market rate of 5.5p/kWh, and a ‘smart’ tariff, which will enable homes with solar and battery storage that can control when they export power to the grid to potentially benefit from even higher rates because they can export at ‘peak’ times when power is more expensive.

However, important barriers still need to be resolved in order for a fully competitive market to develop and there are no comprehensive offers yet beyond the domestic market. Since April 2019, small-scale commercial and community energy generators have been left with inadequate routes to market.

ENDS

 

Notes to editors

[1]The Future For Small-Scale Low-Carbon Generation: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/807393/smart-export-guarantee-government-response.pdf

[2] Understanding the Smart Export Guarantee: https://www.solar-trade.org.uk/resource-centre/advice-tips-for-households/smart-export-guarantee/

[3] Octopus Energy Grabs Top Spot in Domestic Solar Export Guarantee League Table: https://www.solar-trade.org.uk/octopus-energy-grabs-top-spot-in-domestic-solar-export-guarantee-league-table/

 

For further information or to request an interview, please contact:

Name: Jack Dobson-Smith

Title: Public Affairs & Communications Officer

Main line: 0203 637 2946

 

Background on the Solar Trade Association:

The mission of the Solar Trade Association is to empower the UK solar transformation. We are paving the way for solar to deliver the maximum possible share of UK energy by 2030 by enabling a bigger and better solar industry. We represent solar heat and power plus battery storage, and have a proven track record of winning breakthroughs for solar PV and solar thermal.