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New year, new guarantee – SEGs vs Market Values

Tim Dixon Team Lead

The Smart Export Guarantee (SEG) came into effect on 1st January 2020. In this week’s Chart of the Week we take a look at the range of offers published and compare these to prevailing market values for renewable power.  The SEG mandates that electricity suppliers with over 150,000 domestic customers offer at least one tariff for power exported to the grid from renewables generators smaller than 5MW. Obligated suppliers are required to offer tariffs with rates above 0p/kWh and eligible technologies are the same as those under the FiT scheme. Offered fixed rates across 14 suppliers so far range from 5.6p/kWh (Social Energy) to 0.5p/kWh (Utility Warehouse). However, Social Energy’s tariff is not strictly a SEG as it is exclusively for their supply customers, and only offered to solar PV with battery storage. A number of other suppliers are also offering exclusive export tariffs for their existing customers. Social Energy’s export tariff of 5.6p/kWh is comparable to the full market value of each of our example plants; however, the average SEG offered across the 14 suppliers falls well short.  In our chart, we compare the highest and average new tariffs offered against prevailing market values for the power (i.e. value sought via a commercial Power Purchase Agreement (PPA)) and the FiT export rate. This market value of exported power can be calculated by looking at the wholesale electricity price, potential embedded benefits for the asset and the value of REGO certificates. ...

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