Following its announcement in December 2018 of the closure of the Feed-in Tariff scheme (FIT) to new applications after 31 March 2019, the Department of Business, Energy and Industrial Strategy (BEIS) launched a consultation on 8 January 2019 on the introduction of a mandatory supplier-led route to market for small-scale low-carbon generation, the so-called "Smart Export Guarantee" (SEG). The proposed SEG would replace the existing FIT scheme, with electricity suppliers paying new small-scale energy producers for electricity exported onto the grid from homes and businesses.
The introduction of the new scheme sits in the wider context of an energy system in transition – one that is becoming smarter and cleaner, with new tools introduced at a rapid pace to facilitate greater control by customers of their energy usage.
BEIS envisages that the new scheme could create a whole new market, encouraging suppliers to competitively bid for electricity, giving exporters the best market price while providing the local grid with more clean, green energy. The aim is to unlock greater choice and control for household producers over how they buy and sell their electricity.
Expanding these themes, the SEG is designed to:
Under the SEG, BEIS would legislate for suppliers to pay small-scale low-carbon generators for the electricity they export to the grid. Payments would be available to all the technologies currently eligible for FIT (up to 5MW capacity) and would be based on the following design:
BEIS is seeking responses from all interested parties, but in particular: consumers, trade associations, small-scale low-carbon electric generators, suppliers, and aggregators.
The introduction of the SEG will not happen in a vacuum – it will sit alongside many changes, including:
The design of the SEG will need to cater for these parallel changes, ensuring that perverse incentives are avoided, and that all of the moving parts are moving in the same direction.
With the consultation open until 5 March 2019 and the design of the SEG still uncertain, it seems a safe bet that the new scheme will not be open for business as soon as FIT is closed on 31 March 2019.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.
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