Yes, you can sell excess electricity back to the grid and make a profit with your solar panels and in this guide, we'll explain how it all works and how you can get started.
Thinking about making the switch to solar? If the free electricity, lower reliance on the grid, and smaller carbon emissions don’t convince you, what about profiting from any excess electricity you make?
That’s exactly what government initiatives such as the Smart Export Guarantee allow you to do.
We’re diving into what this initiative is today, and how you can use it to make a profit and decrease the time it takes to pay back the cost of a solar panel system.
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Quick takeaways:
You can sell excess electricity back to the grid via the Smart Export Guarantee (SEG)
Most people don’t use all of the electricity their solar panels generate
Selling excess electricity to the grid reduces your payback period
3.5 kilowatt peak (kWp) is the average size of a solar panel system in the UK
The maximum size system eligible for the SEG is 5 megawatts (MW)
What is the Smart Export Guarantee?
In 2020, the UK government launched the Smart Export Guarantee (SEG), requiring certain energy suppliers to pay homeowners for any excess electricity they generate from renewable sources.
This includes solar panels, but also wind turbines, hydropower, and other green technologies.
The SEG was set up to replace the Feed-in Tariff (FiT), which ended in 2019, but it’s not quite a like-for-like replacement. Previously, the FiT would just pay consumers the best current rate for excess electricity. Now, with the SEG, consumers have to find whomever is offering the best rates themselves, so it’s not as hands-off as the FiT.
Only large energy suppliers (those with 150,000 customers or more) are obligated to pay consumers via the SEG, so if your energy supplier is below the threshold, you won’t benefit from exporting excess electricity.
How Does the SEG Actually Work?
Most households won’t use all of the electricity their solar panels generate, meaning any excess electricity gets diverted straight back to the grid. So in this instance, the grid is benefiting from the electricity you generate, and you’re gaining nothing in return.
With the SEG, you can benefit from the excess electricity too, in the form of payments that your energy supplier will give to you (they have to be part of the scheme however).
As we said earlier, the rates you’ll get paid aren’t fixed like they were with the FiT, so the onus is on you to find the supplier that offers the best rates. Right now, the best rate for solar panels owners without battery storage is the Next Export Exclusive tariff from E.ON, which pays consumers 16.5p per kilowatt hour (kWh) their solar panels generate.
If you have battery storage with your solar panels, then the Intelligent Octopus Flux from Octopus offers a genuinely impressive 27p per kWh.
Please note that your battery has to be from GivEnergy, otherwise with any other battery, the rate falls to 23.5p per kWh (under the Octopus Flux tariff).
Explore a Solar Case Study: Check out an insightful Q&A session featured in one of our detailed case studies on domestic solar panels. Hear directly from a Heatable customer in the UK and gain valuable perspectives on their experience here.
The image above shows a 23-panel solar installation, carried out by the MCS-certified solar team at Heatable, featuring the REA Fusion2 solar panels.
Is the SEG Worth It?
We’d say so, as if you’re not going to use all of the electricity you generate (either because you’re not there, or you’re storing it in a battery), why not make a small profit on the side?
Once you’re signed up, your supplier will simply pay you for each kWh of electricity you feed back into the grid. It’s quite literally that simple!
Our main issue with the SEG is that the rates being paid are substantially lower than what the FiT would pay – even when considering the very highest rates paid via the SEG. As an example, if you’d installed solar panels back in 2011, you could’ve earned around 46p per kWh (assuming a 4 kWp solar system).
Still, the SEG is a completely passive way to earn extra income and shrink the time it takes to break even on your solar panels.
How Much Can I Earn With the SEG?
The average three-bedroom household can earn between £150 and £212 with a typical 3.5 kWp solar panel system, depending on what tariff they’re on. We’ve decided not to include the very highest tariffs in this calculation (such as the Octopus Intelligent Flux tariff), because they’re usually conditional and not always available to everyone in the UK.
Does the SEG Help Me Break Even Faster?
Yes, exporting excess electricity via the SEG means you’ll pay back the cost of your solar panels faster. With the SEG profits, your break-even point for solar panels can shrink to a little over a decade.
After this point, you’ll be in pure profit!
Will Where I Live Affect SEG Payments?
Depending on where you live in the UK, your solar panels will generate different amounts of electricity. And that means the amount you’ll get paid via the SEG can differ substantially.
In fact, there can be as much of a difference as 36% in annual SEG profits for people living right up in the north of Scotland, and people living in the south of England.
Despite this big difference, the SEG is still (in our opinion) worth going for. Solar panel owners in Scotland for example, will still benefit greatly from the reduced bills and shorter payback time.
Just to add quickly, solar panels still work even in cloudy weather! Electricity generation from solar panels under light cloud cover drops by around 23.5%, falling to nearly 66% under heavy cloud cover. So you’ll continue generating power in bad weather, just likely not enough to meet all of your electrical needs.
Also, where you live will affect your break-even point, with it climbing to as high as 17 years in the north of Scotland, or falling to just under 12 years in South Wales.
Am I Eligible for the SEG?
To be eligible for the SEG, you must meet some of the following requirements:
Your solar system (or any other renewable energy system) must not exceed 5MW. Trust us when we say, it’s extremely unlikely any residential system will come close to a system this big!
You must be with an eligible energy supplier (one with more than 150,000 customers). You can check this by either contacting your supplier, or by going to the Ofgem website.
You’ll need to have a smart meter installed, or a meter capable of reading exported electricity.
How Can I Apply?
Applying for the SEG is reasonably simple! All you have to do is:
Give your supplier your Microgeneration Certification Scheme (MCS) certificate, which you would’ve gotten when your solar panels were installed. You might have a different equivalent document, but you’ll still have received it with your solar system’s installation.
You’ll need to give your energy supplier a Meter Point Administration Number (MPAN). Now this sounds a little scary, but you can usually find the 13-digit MPAN number on your electricity bill, or by contacting your energy supplier.
It’s really just a case of asking your energy supplier about exporting via the Smart Export Guarantee, and following the steps they give you.
Can I Use the SEG if I Get Paid Via the FiT?
Yes, if you were one of the lucky people to install solar panels when the FiT was still available, you can benefit from FiT and SEG payments.
Is a Smart Meter Required for the SEG?
Most energy suppliers are going to want you to have a smart meter in order to benefit from the SEG payments. Don’t worry, it’s not for any nefarious reasons – it’s simply because your supplier wants to make sure you’re paid correctly for how much electricity you export.
Read more:
There are several smart things you can do to get more out of the SEG, so you can maximise the money you make (and the money you save on energy bills):
Export excess electricity during peak times
For this, you need a combination of two things: a storage battery and an SEG tariff that pays you more for exporting during peak demand.
The Intelligent Octopus Flux SEG tariff for example, will pay you more per kWh exported during peak hours (typically 16:00–19:00). So what you can do is charge your battery during the day (easily done when you’re not at home), and then start exporting when demand is highest.
Keep Your Solar Panels Well Maintained
Keeping your solar panels well maintained is important to getting the most out of the SEG.
After all, a clean solar panel is a more efficient solar panel, and a more efficient solar panel is one that generates more electricity, meaning you’ll make higher profits via the SEG.
Optimise energy usage
Keep an eye on your electricity usage and try to implement strategies to keep it lower during peak demand. Taking a few simple steps to reduce how much electricity you use means you’ll have more excess electricity to export and profit off of.
Next Steps For Your Solar Journey:
When planning to install solar panels for your home, there are several important factors to consider. Make sure to refer to the following guides to help you make informed decisions:
To dive deeper into these topics, head over to our advice section, check out our YouTube channel for informative videos, or read a customer case study to see how others have benefited from their solar installation.
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