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Solar panel power payments set to return – but how much you'll get and from when is unclear

A new plan to pay households with solar panels for the excess electricity they produce has been announced by the Government – but it won't come in before April, when the current scheme ends.

The new "smart export guarantee" would see households with solar panels earn money from suppliers for any power that's not used, and so is exported back to the grid.

The announcement follows the closure of the current feed-in tariff (FIT) scheme for solar panels to new applicants, from 31 March.

However, the Government has not indicated any timescale for when this new scheme will launch, meaning those that install solar panels after April won't be paid for exporting electricity for a time – as it's likely the new scheme won't be up and running by then.

For more on solar panels, see our Solar Panels – are they worth it? guide.

What's the current scheme and how is it changing?

Under the current FIT scheme, households that install solar panels are paid for each kilowatt of electricity they generate.

On top of this, households are also paid a separate rate for exporting excess electricity – but owing to the difficulties of measuring this, it is assumed that all households export 50% of what they generate.

However, last year it was announced that both payments would end for new applications from April 2019.

This means that until the new scheme is launched, anyone installing solar panels in their home after then would only benefit from bill savings for generating their own electricity – and would be exporting electricity back to the grid for free.

If you get solar panels installed after the current scheme ends and once the new one is in place, it could take as long as 77 years to recoup your investment.

But if you get them installed and registered before 31 March, or if you're already receiving payments for generating electricity, this won't change – you're still guaranteed payments under the current FIT scheme for at least 20 years.

What is the Government proposing?

Today's proposals outline the Government's suggested legislation to pay small-scale low-carbon generators for electricity exported back to the grid – called the Smart Export Guarantee (SEG).

This will cover everything currently allowed under the FIT – primarily solar panels installed in domestic households.

The Government has proposed:

  • To mandate that any energy supplier with more than 250,000 customers offer a price per kilowatt hour (kWh) for electricity they export back to the grid. Smaller suppliers may do so voluntarily.
  • Suppliers would decide the tariff they offer – including how much they pay per kWh and for how long. It's not yet known how much will be offered.

  • All suppliers with more than 250,000 customers will be obliged to offer at least one such tariff.

  • The price suppliers pay must be above zero at all times – even on the rare occasions when the wholesale electricity price drops into negative (for example, in periods of oversupply).

  • Electricity exported must be measured – the Government expects smart meters to enable this.

The Government will now consult on these proposals for eight weeks.

Could smart meters delay this?

The new scheme also relies on smart meters – the roll-out of which has been plagued by technical issues and delays.

Under this new scheme, smart meters – which will be offered to all homes and small businesses by 2020 – will track the actual amount of electricity being exported to the grid.

One of the key concerns is that the first generation of smart meters – known as SMETS1 – can't currently do this, as they can't talk to the national communications network for smart meters. This is the same issue that causes most meters to go 'dumb' when switching supplier.

The Government, however, has said that smart meters are able to measure exported electricity – and believes that these issues shouldn't stop the new scheme from launching.

There's also concerns that the roll-out of smart meters will face delays, following a National Audit Office report in November 2018.

What does the Government say?

Energy and Clean Growth Minister Claire Perry said: "This new scheme could help us to build a bridge to the smart energy system of the future, with consumers firmly at its heart – not only buying electricity but being guaranteed payments for excess electricity they can supply to the grid.

"It could also reduce strain on energy networks with a more decentralised and smarter local network delivering resilience much more cost effectively, unlocking innovative products for electric vehicles and home energy storage, a win-win for consumers and the environment and a key part of our modern industrial strategy."

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