Here in the UK, home solar power has been gaining in popularity for well over a decade. With the government’s commitment to transitioning to renewable energy sources, homeowners have been encouraged to install solar energy systems in their homes for environmental reasons and their financial benefit.
Until the end of March 2019, the government offered what was known as feed-in tariffs (TIF). Utility companies paid homeowners for the solar electricity they produced and sent to the electric grid. These rates were fixed, usually above retail prices, and were guaranteed for long terms, usually around 20 years, meaning that solar customers could quickly pay off the costs of solar installation and continue earning money on their system.
However, the government phased out this program beginning in April this past year and instead offered home solar customers a form of net metering called the Smart Export Guarantee (SEG). While less lucrative than the TIF, this program still encourages homeowners to produce more electricity from their home solar panel systems by providing payment for energy exported to the grid.
Exactly how solar net metering works can be a little confusing, especially since it’s such a marked change from previous policy. Let’s look at how net metering fits into the SEG and how you can take full advantage of net energy metering after your solar panel installation.
What Is Solar Net Metering?
Solar net metering is a relatively new concept in the UK, but it has been in use in many other countries worldwide. For instance, in the United States, net metering has been adopted on a state-by-state basis, which results in a wide variation in policies depending on where you live. However, many other countries like Denmark and the Netherlands have had net metering for decades.
In essence, solar net metering involves tracking the electricity generated by your home solar panels that you supply to the electric grid. Your utility company will then pay you for that electricity, with the rate determined by the agreement you sign with your provider. These payments can be monthly, semi-annual, or annual, depending on the policy set by your provider.
How Does Net Metering Work?
At certain times during the day, your home solar panels probably produce more electricity than you need. That is especially true during the middle of the day when you’re less likely to be home and require less energy to run appliances, light your home, and so on. While many homes have deep cycle batteries they can use to store that excess electricity, even these homes may generate more electricity than they can use or store at any given time.
Rather than waste this electricity, net metering allows you to sell that electricity back to the power company by sending the excess power into the grid, essentially turning your home into a small-scale energy producer. Not only do you earn money for the energy you send back to the grid, but you’ll also likely use less energy from your utility company, cutting your electric bill.
Participating in net metering in the UK is relatively straightforward. Still, there are several factors that you’ll need to keep in mind, from the type of solar equipment in your home to upgrading to a smart metering system. Here are some of the requirements you need to know before applying to enroll in a solar net metering program like the SEG.
Under the terms of the SEG, only home solar installations that create less than 5MW of power are eligible for credit values. Luckily, most home solar systems fall under this category.
One of the first steps in enrolling in the SEG program is finding an approved SEG licensee to handle your account. While your energy supplier is the most likely SEG licensee, you can also find licensees not affiliated with your power company—and they may offer you better rates.
MCS stands for the microgeneration certification scheme, and to qualify for the SEG, you’ll need to be able to prove that your home solar system is appropriately certified. The actual process of verifying your certification depends on which supplier provides your home energy, the details of which you can find on your SEG licensee.
If you have an MCS certificate, your home solar installation should have no problem qualifying for this net metering system. Your solar installer should provide you with a copy of your certificate once they finish the installation as long as you choose one of the approved, licensed solar companies.
A fundamental part of solar net metering is the ability to measure the amount of energy you’re sending into the grid. The measuring process usually requires two meters on your home—one to measure the amount of electricity you consume from the grid and one to measure your contributions.
Most companies participating in the SEG require a meter that can provide readings every half hour. Older meters are simply unable to accomplish this, either because they need manual readings or cannot upload that information to the company. Luckily, smart meters should be installed by your power company, with no separate installation fee.
While these smart meters won’t necessarily track all the power your solar panels produce, they provide an accurate reading of what you supply to the grid.
Benefits of Net Metering
Solar net metering agreements like the SEG incentivize individuals to install home solar arrays (a collection of multiple solar panels), including rooftop solar and separate solar arrays. However, once you have installed your system, you’ll benefit in two important ways.
The first and foremost advantage is the export tariff you’ll receive for the electricity your home solar system contributes to the grid. Depending on the rate your SEG licensee agrees to pay you as part of your net metering agreement, you’ll receive a set payment based on the schedule formulated in your contract.
Second, solar net metering encourages you to draw less on the electric grid. By utilizing the power that your home solar installation generates, you’ll lower your utility bills. When that amount is added to what you receive from your export tariff, the value of your solar panels increases even further.
Types of Solar Net Metering Agreements
While the only net metering agreement available to UK residents is the SEG, there is still some variability among these agreements. Tariff rates, frequency of payments, and other factors vary from licensee to licensee and likely from year to year, too. As a customer, you’ll need to decide which solar net metering agreements offer you the best terms based on your needs.
However, one crucial term is battery storage exports. If your home has an energy storage system such as deep cycle batteries, you’ll want to find an SEG licensee that will allow you to send excess energy from your batteries to the grid.
That method is somewhat complicated, though. Your batteries are likely to be charged with solar energy, but you may also have your system set up to allow those batteries to grid-charge, as well. When this happens, you’ll probably be unable to sell this “brown energy” back to your supplier.
Does the UK Offer Net Metering?
Currently, the only solar net metering agreement available for newly installed home solar installations is the SEG. However, for homeowners who previously agreed to a FIT, you can continue drawing payments until that agreement expires. So while you can terminate your FIT in favor of joining an SEG, you’ll end up earning less from this net metering agreement.
For SEG customers, your agreements are likely no longer than annual contracts, meaning there may be some volatility or degree of variation in how much you earn as a solar net metering participant. Still, companies must pay you a rate higher than £0 per kilowatt-hour, meaning you’re guaranteed to receive at least some compensation for contributing power to the grid.
The Bottom Line
As it currently stands, solar net metering in the UK is less flexible than solar net metering programs and policies in many other countries. Here, homeowners get less of a return on investment than the previous FIT program. However, the SEG does indeed give UK residents with home solar systems the opportunity to receive payments for the energy they produce. This return makes installing a home solar array not only environmentally responsible but much more feasible economically.
Whatever net metering option you choose, the best advice is to focus on your home solar system first. Ensure that you have the correct number of solar panels and that you’ve selected models that work best in the UK’s climate. You should also be sure to install top-quality components, including batteries and inverters, which will ensure your system runs as efficiently as possible.
When it comes to net metering, your critical focus should be saving yourself money. The more you save, the faster your investment will pay for itself, and that’s the goal for any homeowner looking to install a home solar system.