New solar homes and businesses creating and exporting electricity to the grid will be guaranteed a payment from suppliers under new laws to be introduced by the government this week.

The Smart Export Guarantee (SEG) will ensure small-scale electricity generators installing solar, wind or other forms of renewable generation with a capacity up to 5MW will be paid for each unit of electricity they sell to the grid - tracked by their smart meter.

Residential solar panels are now over 50% cheaper than in 2011, and the SEG will build on the previous government subsidy scheme, which drove the installations of 850,000 small-scale renewable projects, but without passing on the cost to consumers.

Encouraging suppliers to competitively bid for electricity will give households the best market price for their energy, while providing the local grid with more clean, green energy, as the UK bids to become a net zero emissions economy.

Energy and clean growth minister, Chris Skidmore, said: “We want the energy market to innovate and it’s encouraging to see some suppliers already offering competitive export tariffs to reduce bills. We want more to follow suit, encouraging small-scale generation without adding to consumer bills, as we move towards a subsidy-free energy system and a net zero emissions economy.”

SEG will place a legal obligation on energy suppliers with over 150,000 customers –covering more than 90% of the retail market - to introduce export tariffs by 1 January 2020. 

Some energy suppliers, including Octopus and Bulb, are already offering new smart tariffs, with some exceeding those offered under the previous subsidy scheme. At peak, solar has provided more than a quarter of the UK’s energy demands.

Chief executive of Octopus Energy, Greg Jackson, said: “These smart export tariffs are game changing when it comes to harnessing the power of citizens to tackle climate change. They mean homes and businesses can be paid for producing clean electricity just like traditional generators, replacing old dirty power stations and pumping more renewable energy into the grid. This will help bring down prices for everyone as we use cheaper power generated locally by our neighbours.”

The previous Feed-in Tariffs (FIT) scheme closed to new entrants from 31 March 2019, to reduce the costs to consumers as the price of installing solar panels came down.

SEG is designed to continue to grow the small-scale renewables export market by supporting local generation. Combined with existing technologies, like smart meters and battery storage, SEG will help bridge the gap to a smarter and more efficient energy system of the future.

The new solar scheme comes as the government will unveil the winners of the latest round of the Energy Entrepreneurs Fund this week. One of the winners, Brill Power, has been awarded £686,000 in grant funding to explore further boosting the lifetime of lithium-ion battery packs for household energy storage and to bring down their cost for consumers.