Why aren’t solar export rates higher?

Dive into the factors influencing solar export rates in our guide.

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- How much will I get paid for selling my excess solar energy?

- Why aren’t export rates higher?

How quickly it takes you to payback your solar panels depends on two things. 1. How much money you save on generating your own electricity compared to buying it from the grid. 2. What you can earn from selling any excess electricity that you produce. However, you’ll quickly find that export rates aren’t very high. In this Green Guide we explain why solar export rates aren’t higher.

How much will I get paid for selling my excess solar energy?

Before we dive in, let’s look at how much you can expect to be paid for exporting your excess solar energy to the grid. There are a few things to keep in mind here. Firstly, there are Smart Export Guarantee (SEG) export tariffs and “normal” export tariffs.

The SEG is a government backed scheme set up to reward customers for selling electricity back to the grid. All UK energy suppliers with over 150,000 customers have to offer an SEG tariff, but they only have to offer it at a rate above £0. This is reflected in the SEG rates on offer, with tariffs ranging from 1.5 p / kWh to 16.5 p / kWh.

Normal export tariffs are voluntary for energy suppliers to offer, and the normal export tariffs are usually set at a higher price than SEG export tariffs. Some rates are as high as 16.5p / kWh! The reason for this is that these “normal” tariffs come with certain requirements. You may, for example, need to import electricity from the same supplier that you export it to. This is not just a trick to attract your business, but genuinely makes it more cost-effective for the supplier to offer you an export tariff. That’s why they’re able to set higher export rates. We’ll dive deeper into this below!

By the way, do you want a better overview of how much you can get paid for exporting your solar power to the grid? We’ve collected all export rates available on the market in a handy table in our guide on how to apply to the SEG.

Why aren’t export rates higher?

There are a few reasons as to why export rates aren’t higher. We’ve outlined some of them below.

  • It’s not possible to have two different energy suppliers allocated to a single meter. So, if a household imports from one supplier and exports to another, the supplier which receives the exported electricity will make a loss. They have to pay the household for the electricity they’ve exported, but the supplier can’t sell this electricity onto someone else.
  • Energy suppliers also have to pay administration costs, levies, and distribution costs. A large part of the administrative costs seem to come from liaising with District Network Operators (DNO) in order to get new households set up to the scheme. This can take several weeks and plenty of back and forth.
  • Because you’re only exporting a tiny amount of energy, compared to the amounts of electricity that energy suppliers typically purchase, they don’t get the benefit of economies of scale when buying from you.
  • In addition to you not producing as much electricity as suppliers would normally purchase, there’s no guarantee around how much electricity you will generate and send to the grid. You might, for example, have set up your system to generate a lot of excess electricity with the intention of future proofing it. Since then, your circumstances might have changed. You may, for example, have bought an electric vehicle or grown your family, which would have eaten into that excess. The unpredictability of purchasing excess electricity from households makes it a bad investment.

It’s a shame that the process of exporting excess energy to the grid isn’t set up better. We’d love to see households be fairly compensated for their contribution in greening the grid, and supporting the UK’s energy independence.

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February 14, 2024
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