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Selling Renewable Energy

Recently, there have been a lot of rule changes about the payments homeowners can receive for the renewable energy that they generate. We’re going to take a quick look at generating renewable energy, changes to the rules and how you might be affected by the new rules.

 

Generating Renewable Energy

The most common way for homeowners to create renewable energy is through solar panels. Solar cells use the photovoltaic effect to convert sunlight to electricity, which can be used to power equipment or to recharge a battery. Solar panels typically go on your roof but you can also install them in your garden or anywhere where they’ll be exposed to daylight (although they are more effective in direct sunlight).

If your current roof is nearing the end of its lifespan, you could also consider investing in solar shingles. Where standard rooftop solar panels are mounted on top of your current roof, solar shingles actually take the place of your roof tiles.

Other sources of renewable energy include:

  • Wind Turbines
  • Hydro Power (requires a source of flowing water)

The Feed-in Tariffs (FITs) scheme closed to new applications on 31 March 2019. However, the Smart Export Guarantee will come into force from 1 January 2020.

How It Works

  1. Solar Photovoltaic Array
    A solar photovoltaic array consists of a number of solar PV panels that are electrically connected. The solar PV array generates DC electricity from daylight.
  2. Inverter
    The DC electricity is then sent to a solar power inverter, which converts electricity from DC to AC. This is necessary, since you need AC power for the energy supply of your home appliances.
  3. Utility Meter
    Your household has a power meter that measures the electricity consumption per house or apartment. The utility meter is connected to the PV system and measures how much electricity you are using in your home.
  4. Electric Grid
    Any extra power that is generated, will be sent to the grid. Additionally, during periods when the PV system doesn’t cover your energy needs, you will be able to supply your home with power from the electric grid if necessary.

It’s not essential, but it’s super useful to install a battery bank to store any unused solar energy that isn’t immediately required. It can then supply your home with electricity during the night or during very cloudy weather when there is insufficient sunlight.

A battery bank will also require a charge controller to be installed. This regulates the DC from the solar panels to make sure that the batteries don’t overcharge and become damaged.

Wind and hydro turbines both work in a similar way – the wind/flowing water causes an axis to rotate. This is attached to a generator, which produces DC electricity. The DC electricity is sent through an inverter, which converts it to AC power ready for your home appliances.

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Exporting Energy To The Grid

Exporting electricity to the grid doesn’t actually involve selling it to the National Grid itself. Instead, supplying the grid with surplus power requires you to sell it back to an energy supplier.

 

Feed-in Tariffs (FIT) scheme

The Feed-in Tariffs (FIT) scheme was a government programme introduced on 1 April 2010 to promote the uptake of renewable energy technologies. Under FITs, householders received payments for the electricity generated by eligible installed systems like solar PV, wind or hydro turbines and additional payments for the excess energy exported to the grid.

Some 800,000 householders with solar panels benefit from payments under the Feed-in Tariffs scheme. However, the subsidies were controversially scrapped by the government in April 2019, causing the number of new installations to fall by 94% in May from the month before.

The Feed-in Tariffs (FITs) scheme closed to new applications on 31 March 2019.

This means that:

  • Householders that installed an eligible system and have already successfully applied for FITs payments are unaffected by the scheme closure.
  • Householders that have installed an eligible system with a Microgeneration Certification Scheme (MCS) certificate dated on or before 31 March 2019 have until 31 March 2020 to apply to the scheme.
  • Householders that have not installed an eligible system on or before 31 March 2019 will not be eligible for FITs payments.

After the government recognised the need to pay small-scale renewable energy generators for the electricity they export to the grid, the Department for Business, Energy and Industrial Strategy (BEIS) decided to introduce the Smart Export Guarantee (SEG).

The Smart Export Guarantee will come into force from 1 January 2020.

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The Smart Export Guarantee

Under The Smart Export Guarantee scheme, all licenced energy suppliers with 150,000 or more customers must provide at least one Smart Export Guarantee tariff. Smaller suppliers can offer a tariff if they want to.

There are no payments for renewable electricity generation – only payments for the electricity that is exported to the grid. However, unlike the Feed-In Tariffs scheme, there will not be any requirement for properties to meet minimum energy efficiency standards.

The technology and installer used by householders must still be certified under the Microgeneration Certification Scheme (MCS) or equivalent (Energy suppliers may ask you to provide a MCS certificate to prove your installation meets this standard).

Exported power must be metered using a meter capable of reading exports on a half hourly basis, even if half hourly readings are not required for the tariff. Meters must also be registered for settlement.

 

Green/Brown Energy

Green energy is electricity that’s come straight from your renewable energy source. Brown energy is energy that’s been imported from the grid and is currently in your storage system. 

The Smart Export Guarantee will allow electricity supply companies to include battery storage as part of their tariffs, however this isn’t a legal requirement. 

If a supplier does include storage in their tariff offers, they can decide whether they want to differentiate payments for only ‘green’ electricity or whether payments can also be made on ‘brown’ electricity. (Speak to you installer about how to separate out the green electricity you generate from any imported brown electricity.)

 

Smart Export Guarantee Rates

There are no set or minimum tariffs for the Smart Export Guarantee – the only requirement is that the tariff must be greater than zero at all times. In practice, this means that it is up to energy suppliers to decide what tariffs to offer their customers.

A fair, average price currently falls between 5p and 6p/kWh – the Solar Trade Association website lists the current deals available.

You cannot receive SEG payments if you already receive payments under the Feed-in Tariff scheme, although you can choose to opt out of your Feed-in Tariff and receive SEG payments instead

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