Implications of the Smart Export Guarantee (SEG) Program

Solar technology has shown a phenomenal performance all around the world over recent years, with it reaching grid parity almost everywhere on the globe. The technology is not only marked with gaining efficiencies but also becoming more and more affordable for the masses, so much so that people are thinking of going solar independently without subsidies. Today, homes equipped with a solar system are more attractive for buyers. Schemes such as net metering policy have further made solar a lucrative investment.

However, as solar becomes popular and is pulling off without any government assistance, government bodies around the world are taking a stricter approach towards the same. Recently, the UK launched a scheme where customers with a solar system installed on their rooftops will have to sell the excess to the energy suppliers at prices determined by these energy supply companies. They will be implementing the smart export guarantee (SEG) program. Earlier, customers’ excess power was purchased by these companies at prices determined by the government itself (feed-in-tariff rates). Attractive feed-in-tariff rates led helped solar gain momentum in markets like Germany.

The SEG scheme won’t have generation tariff and customers will be paid only for the excess energy that they pass on to their energy supplier. Another drawback of this scheme is unlike the earlier version the export price is not set by the government and there will be no long-term contracts for the same. This policy has affected the new as well as existing buyers of solar panels, as it will now take a longer duration to break-even. This scheme will be effective starting in January 2020. However, that said, solar still remains a lucrative investment option given its affordable and environment-friendly nature. Also, it helps customers to cut their electricity bill expense to a great extent.

“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,” said Leonie Greene, director of advocacy and new markets at the Solar Trade Association.

Source: Solar Power Portal UK