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Smart Export Guarantee tariffs Vs market values

21st January 2020

On 1 January 2020, the Smart Export Guarantee (SEG) came into effect. The SEG mandates that electricity suppliers with over 150,000 customers offer at least one tariff for power exported to the grid from renewable generators smaller than 5MW. Obligated suppliers are required to provide tariffs with rates above 0p/kWh and available technologies are the same as those under the Feed-in Tariff (FiT) scheme.

Research from Cornwall Insight examines the range of deals published compared to the current market values for the power – values sought via a commercial Power Purchase Agreements (PPAs) – and the FiT export rate, shown in the below graph.

 

Tim Dixon, Wholesale Team Lead at Cornwall Insight, said:

“So far, there are fixed rates across 14 suppliers, which range from 5.6p/kWh (Social Energy) to 0.5p/kWh (Utility Warehouse). Social Energy’s export tariff* of 5.6p/kWh is comparable to the full market value of each of our example plants (including a solar site in the South West, wind in Southern Scotland and an Anaerobic Digestion (AD) plant in the Eastern region). However, the average tariff offered across the 14 suppliers standing at 3.5p/kWh falls well short.

“While some tariffs appear to be relatively high, with four suppliers offering rates above 5p/kWh, they alone are not likely to underpin the business case to invest in new small-scale renewables due to their short-term nature and links to variable market values for wholesale and embedded benefit values. For example, after April 2021, embedded benefit values are set to fall further amid reforms to network charging.

“The SEG market will continue to develop in the first quarter of this year, with several obligated suppliers still yet to publish their SEG rates. There are also many suppliers offering more lucrative tariffs alongside their SEG offerings that might make these deals more attractive.”

–Ends

Notes to Editors

* Social Energy’s tariff is not strictly a SEG as it is exclusively for their supply customers and only offered to solar PV.