From January 2020, the British legal framework for solar panels has changed. The new Smart Export Guarantee government incentive is not a solution to increase renewable energy consumption, but paves the way for a new approach: smart energy, smart meters, smart grids and smart digital energy communities.
The current situation for solar panel incentives is very different from the last two decades.
The Feed-in Tariff scheme basically pushed companies to purchase energy generated by domestic solar panels of private citizens. Now, the FIT scheme has ended and government support for PV systems has changed. The new Government initiative, the Smart Export Guarantee, has established a new incentive system for owners to offset their investment but it is not as attractive as the old FITs. Under this new programme, the payback period for PV panels has increased.
Government grants for PV solar
Nowadays, there are no Government grants for solar panels in the UK. The Government concluded the Green Deal in 2015 after two failed attempts to provide interest-free loans, and then grants, to encourage citizens to purchase solar panels or to adopt a range of other energy-efficiency measures.
The Government initiative currently in force, the Green Deal Home Improvement Fund (GDHIF), does not provide a solar-panel fund, but is instead focused only on multiple types of energy-saving home improvements.
Free solar panels for pensioners
Back in the days of the Green Deal, pensioners could easily get a solar PV grant from the government. This certainly wasn’t a gift, but the loans were interest-free, and pensioners, spending more time at home, could absorb the expense more quickly than other citizens who spend their day out at work.
Feed-in Tariff: government incentive no longer available
Starting in 2010, the UK Government promoted domestic solar PV installation with a very attractive incentive: the Feed-in Tariff scheme, but on 31 March 2019, the scheme stopped accepting new applications. An exception was made for those who had a Microgeneration Certification Scheme (MCS) certificate before the deadline: they could submit an application to their energy supplier until 31 March 2020.
Actually, the FITs were available not only for photovoltaic energy but for all types of renewable energy. The scheme was open to anyone who had installed domestic renewable and low-carbon electricity-generating technologies with a maximum total installed capacity of 5 MW, including:
- Solar PV (roof-mounted or free-standing)
- Wind (building-mounted or free-standing)
- Anaerobic digesters
- Micro CHP (Combined Heat and Power) – with a capacity up to 2 kW
Successful applicants benefited from incentives for generation and export and savings on bills.
The generation tariff was a fixed price for each kWh of generated electricity, guaranteed for the period of the FITs, up to 20 years. The export tariff, a second income stream, was a rate granted to prosumers for each kWh fed into the public distribution grid. The third benefit came directly from savings on energy bills due to self-generation and consumption of energy, thus reducing energy withdrawn from the grid.
FIT payments were made based on the meter reading users submitted to their energy retailer, which made payments from the date the consumers were admitted to the scheme until expiry of their contract, usually 20 years later. Prosumers who signed up before the deadline received FIT payments upon termination of the period of validity of the contract, even if the FIT scheme ended.
Smart Export Guarantee: government support for the export of renewable energy
From 1 January 2020, the Department for Business, Energy and Industrial Strategy (BEIS) introduced the Smart Export Guarantee (SEG), to fill the void left by FITs. In fact, the technology included by this incentive is the same as under the FIT scheme. But the two initiatives are very different. The new scheme is focused only on remuneration for renewable energy exported to the National Grid. The new mechanism ensures small-scale generators, such as citizens with a PV system, are paid at least a minimum fee for energy fed into the Grid.
With FITs, tariffs were fixed as they were decided and paid by the Government; now, under the SEG, any energy company with at least 150,000 customers must offer a tariff, but each is free to set the rate. Smaller suppliers can offer a fee on a voluntary basis. The only limitation imposed by the Government is that offers must always be greater than £0.
The economic savings associated with solar PV remain, of course. Customers with PV panels will still have the opportunity to lower their electricity bill by self-consuming the energy generated on-site. However, without the generation tariff there is no real opportunity to quickly offset the initial investment. For instance, according to the Energy Saving Trust, if you live in London, your overall saving drops from £375 – £515 to £300 – £390 depending on when you spend time at home. So the payback you can get from SEG increases.
There is some good news. Currently, some suppliers are offering 5 to 5.6 p/kWh, exceeding the FITs export tariff (5.24 p/kWh). The other good news is that SEG payments must be calculated using Export Meter Readings. This method allows people to precisely measure the amount of energy they feed into the grid and be paid exactly for that amount. The best way to measure export energy is by installing a smart meter, capable of reading data instantly.
This new scenario is similar to that in Italy: the Public Energy Service Provider (GSE) pays the owner of PV panels a tariff for the energy fed into the grid, but this incentive varies on the location of the installation and the time of day when energy is exported. In the Italian context, government incentives for extra energy are no longer attractive, because from this year Energy Communities are allowed. This new opportunity, very similar to British Community Energy, or at least to some of these initiatives, allows members to maximise self-consumption, also thanks to energy storage systems, but especially by sharing energy with other members of their community, at a fair price defined on a peer-to-peer basis and guaranteed by a private contract.
In conclusion, as the new scenario for solar PV grants and incentives is no longer as attractive as it was, the solution to gain greater profits from this sustainable choice is by joining the Regalgrid platform and installing a SNOCU unit, allowing you to join an Energy Community project and share energy with others in compliance with the EU directive. Adopting this new approach to renewable energy gives new meaning to the abbreviation “PV”: which now not only stands for “photovoltaic”, but also for “point of view”, with a more informed and self-aware perspective being adopted relative to energy consumption, and one which is open to sharing not just renewables.
During the early stages of development in renewables, distribution of DERs was incentivized through government subsidization schemes across Europe. Although these programmes encouraged the installation of renewables, a mix of limitations from regulatory frameworks and a lack of technology prevented these systems from reaching a higher level of efficiency.
The trend is now changing: the most recent regulations in Europe authorize consumers and prosumers to form energy communities in order to manage their energy requirements and maximise the benefits of distributed energy generation via smart digital control of the System.
The Regalgrid® platform is a complete smart grid-management system capable of constantly maximising the collective self-consumption of renewable energy generated within a determined grouping of grid nodes. With a 100% hardware-neutral philosophy our system can communicate and interface with all leading hardware brands and components. Using a local gateway SNOCU unit, it performs real-time monitoring and active control of every single node in the community. Proprietary cloud-based algorithms perform dynamic management of all renewable generation assets and storage, smart HVAC-type heat pumps and EV chargers, to optimize energy distribution among members of the community.
The Regalgrid® platform is a cost-effective and efficient evolution towards the optimisation of all non-programmable renewable energy sources, particularly for those grid-connected low-voltage residential PVs and ESSs.