Under new proposals to help unlock ‘smart energy systems of the future’, businesses and households installing solar panels will be guaranteed a new form of payment for exporting their power to the grid.
The government’s existing support scheme for small-scale clean power installations, the Feed in Tariff (FIT), is due to expire in April this year.
The hugely successful scheme has supported around 800,000 solar installations nationally since 2010 with a 20-year subsidy payment for generating clean power and an ‘export tariff’ to pay owners for exporting their surplus power to the grid.
While the solar industry had accepted the government’s decision to cut the generation subsidy, a national campaign backed by over 200 organisations has urged the government to reverse its plans to scrap the export tariff. Without it, critics pointed out that new solar panel owners would effectively be subsidising the power industry for free.
In response, the government has now unveiled new plans in a consultation which runs until March. Under the proposals, the FIT scheme will be replaced by a ‘Smart Export Guarantee’ (SEG) which will mandate energy suppliers to offer homes and businesses with solar panels a market-determined price per kWh for their surplus electricity.
This is different to the FIT approach, which pays an export tariff for 50 per cent of the electricity generated, regardless of whether that much is actually exported or whether the grid needs it.
‘Smarter energy system’
The government hopes that the SEG scheme will create a whole new market, encouraging suppliers to competitively bid for small-scale electricity from homes and businesses. For the market to work, participating homes and businesses will have to have a smarter meter in place to provide energy suppliers with half-hourly settlements.
Energy and clean growth minister Claire Perry said: “This new scheme could help us to build a bridge to the smart energy system of the future, with consumers firmly at its heart – not only buying electricity but being guaranteed payments for excess electricity they can supply to the grid.
“It could also reduce strain on energy networks with a more decentralised and smarter local network delivering resilience much more cost effectively, unlocking innovative products for electric vehicles and home energy storage; a win-win for consumers and the environment.”
No decision has yet been made on when the new system will come into force, but it will only apply to those installing solar panels after the FIT scheme expires.