Smart Export Guarantee to replace Feed-in Tariff?

smart export guarantee

Feed-in Tariff (FiT) is the scheme by which people or businesses who generate electricity from renewable sources are paid for the energy they use and export to the grid. The scheme closed to new applications on 31st March 2019. Anyone already in the scheme will continue to benefit for the life of their agreed contract term. However, this does mean there will be a gap in payments for anyone who would have been eligible for FiT but didn’t have an eligible renewable energy source in place before the cut-off date.

Businesses can still apply for FiT up to 31st March 2020 if the installation was certified by the Microgeneration Certification Scheme (MCS) and commissioned on or before the cut-off date.

What is the Smart Export Guarantee?

The potential replacement for FiT is the Smart Export Guarantee (SEG).[1] This is a new scheme. The Government are currently consulting on the scheme and the results are still being assessed. Depending on the feedback, there is a chance that SEG may not go ahead, but it’s still likely that there’ll be some replacement for FiT. It’s part of the broader government strategy to support low carbon electricity generation and to provide a way for it to be sold.

SEG would apply to the same range of technologies as is covered by FiT but it would be a move to a supplier-led approach for payment. This means that:

– Suppliers would become responsible for providing the route to market for low carbon electricity, to encourage small scale generation.

– Suppliers with more than 250,000 domestic customers would have to offer at least one SEG tariff. They would also set the price they would pay for each kilowatt hour (kWh) of electricity bought.

– Smaller suppliers would have the option of supporting SEG but would not be legally required to do that.

-The rate paid per kWh must be more than zero.

-When pricing is negative, generators who still export to the grid won’t have to pay suppliers.

SEG and smart meters

The proposal for SEG also suggests that payments would have to be made on a metered basis. This means that domestic customers would have to have a smart meter to be able to sell their excess energy back to the grid. Due to different approaches taken with the first-generation smart meters (SMETS1), it’s not always possible for suppliers to obtain readings from smart meters that they did not install. This will be resolved when the meters are enrolled in the Data Communications Company (DCC) infrastructure during 2019 and 2020.

As well, to put this in the wider context, small scale generation is expected to become much more established. Ofgem may decide to extend half hourly settlement to cover the whole market. If that change goes ahead, suppliers will be expected to offer tariffs that pay small scale generators on a half hourly basis.
Ultimately, whatever the result of the consultation, there’s a perceived need to for the government to mandate support for low carbon generation until the market can stand on its own.

British Gas are a FiT licensee and can make FiT payments to businesses who qualify. Find out more.

Find out more about smart meters for business.

Find out more about The Data Communications Company (DCC) communications infrastructure.

[1] The Future for Small Scale Low-Carbon Generation – January 2019.

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