Smart Export Guarantee (SEG) UK: How It Works & What You Can Earn

What Is the Smart Export Guarantee?

The Smart Export Guarantee (SEG) is a government-backed scheme that pays you for the surplus electricity your solar panels generate and export to the National Grid. Introduced in January 2020, SEG requires licensed electricity suppliers with over 150,000 customers to offer an export tariff to small-scale low-carbon generators — that means homeowners, landlords, and small businesses with solar PV systems.

In plain terms: if your solar panels produce more electricity than your home uses at any given moment, the excess flows back into the grid. Under SEG, your energy supplier pays you for every kilowatt-hour (kWh) you export. It is not a subsidy — it is a market-based payment for clean energy you have generated.

How SEG Replaced the Feed-in Tariff (FIT)

Before SEG, the UK operated the Feed-in Tariff scheme, which closed to new applicants on 31 March 2019. FIT paid households for both the electricity they generated and the electricity they exported, with the generation payment being the larger of the two. The export payment under FIT was a flat "deemed export" rate — typically 50% of generation — regardless of how much you actually exported.

SEG differs in several important ways:

• No generation payment. Unlike FIT, SEG only pays for electricity you actually export. You are not paid simply for generating power.
• Metered export. SEG requires a smart meter to measure exactly what you send to the grid — no more estimates.
• Market-driven rates. Suppliers set their own SEG tariffs, competing to attract customers. Rates range from as little as 1p/kWh to over 20p/kWh depending on the supplier and tariff conditions.
• You can switch. You are not tied to the supplier who installed your panels. You can choose any SEG-licensed supplier offering a tariff, even if they do not supply your import electricity. This was not possible under FIT.

How SEG Works with Solar PV

Here is a step-by-step breakdown of how SEG works in practice:

1. Your solar panels generate DC electricity during daylight hours. An inverter converts this to AC electricity your home can use.
2. Your household appliances run on solar power first — this is "self-consumption" and saves you around 25–30p per kWh (the cost of grid electricity).
3. Any surplus electricity your home does not use is automatically exported to the National Grid via your electricity meter.
4. Your smart meter records every kWh exported. Your chosen SEG supplier reads this data and credits your account — typically quarterly or as a deduction from your electricity bill.

The payment is not cash-in-hand for most people. Instead, it appears as a credit on your energy bill or as a direct bank transfer, depending on the supplier's terms.

Which Energy Companies Offer SEG and What Are the Rates?

The SEG market has matured significantly since 2020. As of 2025, major licensed suppliers must offer at least one SEG tariff. The rates and conditions vary widely, so comparing the market is essential.

Typical SEG rates as of mid-2025 include:

• Octopus Energy — Outgoing Fixed: 15p/kWh fixed for 12 months. Widely regarded as one of the strongest standard SEG tariffs on the market.
• Octopus Energy — Outgoing Agile: A variable rate that tracks wholesale electricity prices. Can pay significantly more during peak demand hours (occasionally exceeding 30p/kWh) but fluctuates daily.
• British Gas — Export & Earn Plus: Up to 15p/kWh for existing British Gas energy customers.
• E.ON Next — NextExport: Typically around 16.5p/kWh for customers who also take their import supply.
• Scottish Power — SmartGen: Around 12p/kWh, available to both customers and non-customers.
• Utility Warehouse and smaller suppliers: Rates typically between 2p and 7.5p/kWh — often best avoided unless bundled with other services.

Important: Many of the best SEG rates require you to also be an import customer with the same supplier. Always read the full tariff conditions before switching.

How Much Can You Earn? Example Calculations

The amount you earn through SEG depends on three factors: the size of your solar array, how much electricity you self-consume, and the SEG rate you secure.

Let us work through a realistic example for a typical Sheffield semi-detached home:

• Solar PV system size: 4kWp (around 10–12 panels)
• Annual generation: Approximately 3,400 kWh per year (Sheffield's average solar irradiance)
• Self-consumption: 50% (typical without battery storage) = 1,700 kWh used in the home
• Exported to grid: The remaining 50% = 1,700 kWh exported

At a competitive SEG rate of 15p/kWh:

• Annual SEG earnings: 1,700 kWh × £0.15 = £255 per year
• Electricity bill savings from self-consumption: 1,700 kWh × £0.28 (average unit rate) = £476 per year
• Total annual benefit: Approximately £731 per year

Over the 25-year lifespan of a typical solar panel system, that amounts to over £18,000 in combined savings and export income — far exceeding the upfront installation cost for most homes.

For context on what a solar PV system costs to install, see our guide on solar panel costs in Sheffield for 2025.

SEG Requirements: What You Need to Qualify

To claim SEG payments, your installation must meet the following criteria:

• MCS-certified installation. Your solar PV system must be installed by a Microgeneration Certification Scheme (MCS) accredited installer. Sheffield Renewable Energy is MCS certified.
• System capacity under 5MW. Domestic systems qualify easily — a typical home installation is 3–6kWp.
• A smart meter. You must have a SMETS2 smart meter that records half-hourly export data. If you have an older SMETS1 meter, your supplier should upgrade it free of charge. If you do not have a smart meter at all, your installer can advise on getting one fitted.
• Registered with a SEG supplier. You must apply to a SEG-licensed energy supplier. This is a straightforward online process — you provide your MCS certificate number, meter details, and bank account or billing information.

If you had solar panels installed under the old FIT scheme, you cannot claim SEG on the same system unless you opt out of your FIT export payments first. For most FIT recipients, staying on FIT is the better financial choice.

Self-Consumption vs Export: Why Using Your Own Power Is Better

While SEG payments are welcome, the real financial case for solar rests on self-consumption. Every kilowatt-hour you use in your home saves you buying electricity from the grid at 25–30p/kWh. Exporting that same kilowatt-hour earns you perhaps 15p/kWh at best.

This means self-consumed solar electricity is roughly twice as valuable as exported solar electricity. The goal, therefore, is to maximise self-consumption — by running high-consumption appliances (washing machines, dishwashers, immersion heaters) during daylight hours when your panels are generating.

Simple behavioural changes — such as setting timers for appliances to run between 10am and 3pm — can shift a significant portion of your home's electricity demand onto solar power, reducing your bills far more than a higher SEG rate ever could.

How Battery Storage Changes the Equation

Adding a home battery to your solar PV system transforms your SEG strategy. Without a battery, any solar electricity generated when you are not at home or when demand is low is exported immediately to the grid at the SEG rate.

With a battery, that surplus is stored and used later — in the evening when solar generation stops but demand peaks (kettle, oven, television, lights). This pushes self-consumption rates from around 50% to 80–90%, dramatically cutting your grid electricity bill.

Going back to our Sheffield example:

• Without battery: 50% self-consumption = £476 bill savings + £255 SEG = £731 annual benefit
• With battery: 85% self-consumption = £809 bill savings + £76 SEG (smaller export) = £885 annual benefit

The SEG payment drops because you export less — but your total savings increase substantially because you are avoiding expensive grid electricity. Over a battery's 10–15 year lifespan, this difference compounds to thousands of pounds. Learn more about battery storage in Sheffield and how it pairs with solar PV.

Is SEG Worth It? The Bottom Line

The Smart Export Guarantee is not a get-rich-quick scheme. It is a modest but meaningful income stream that improves the overall return on your solar investment. The real savings come from using your own solar electricity rather than buying it from the grid — and SEG tops up your returns on whatever you cannot use.

For most Sheffield homeowners, combining solar PV with a battery and a competitive SEG tariff delivers the best financial outcome. The technology pays for itself, insulates you from rising energy prices, and reduces your carbon footprint — all while earning a small quarterly payment for the clean energy you share with the grid.

For more guides on making the most of your solar investment, browse our solar and energy blog for the latest advice tailored to Sheffield and South Yorkshire homes.