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Solar panels, feed in tariffs, smart export guarantee & heat source pumps - a simple guide

For when you've no idea what this stuff is, here is a short simple introduction with a video at the end!

As you may have read in my previous blog here, solar panels are installed on a lot of new build developments.

Are these a necessity now?

Well, no not exactly.

When building new houses the developer has an eco criteria to meet from a whole list of choices that effectively earns points towards the design. From insulation to green communal spaces, to solar, heat pumps and bike racks!

What's the short story of how they work?

Solar photovoltaic systems change sunlight into electricity for use immediately or to store in a battery for later use when it's not sunny, that night for example.

It doesn't have to be sunny, energy can still be generated on a cloudy day just not as much of it as on a sunny one. Hence part of the supply and demand issue in the UK!

Some homes (like ours) have solar panels but no storage batteries - this means that whilst it is day light I can use the energy that is generated but once it is dark the system no longer generates any.

It may be that the panels aren't generating as much on any given day because of low day light so energy from the grid takes over. Or maybe I've got all the lights on, washing machine, hot bath running, tv you name it everything is going full pelt and so whatever I need comes from which ever source can supply it.

Storage batteries will store the excess energy you've not used so that you can that evening or the next time you need to.

If you don't use what you have generated (green energy) or what is in the battery (brown energy) you can benefit from it being redirected back to the grid and you can be paid for generating electricity! This used to be called a FIT but is now SEG - more below.

A few key things to consider. The panels will need to be either south or south west facing although anything other than north facing can be looked at.

In order to have benefitted from the feed in tariff (FIT) where you are paid for redirecting your generated energy back to the grid, you will have needed various things in place to be eligible.

Such as an energy performance certificate (EPC) and have a rating of D or above to qualify which determines how energy efficient your home is. There's no point in becoming a generator of renewable energy if you're going to have terrible insulation for example as you'll lose all you've generated anyway!

An accredited assessor will have done this for you - the FIT finished for any new applicants in 2019. Just wanted to address the FIT in case of any questions.

Are solar panels or tiles worth the upfront cost?

Lets take a 3 bed home that might have 5-6 solar panels on the roof installed. Each panel system may cost in the region of £500 but as with everything there are lots of if's but's and maybe's but as a super general rule of thumb thats what I'm going with.

Links to more specifics at the bottom of the blog.

So if you've paid out £3500 for a solar power system which is fantastic for lowering your carbon footprint because you will be using much less from the national grid, but how much can you expect to save each year?

Take said average house, with current electricity pricing you're looking at around £600 a year for your average consumption of about 2800 kWh. You can expect to reduce this by effectively using less from the grid to the tune of around £100-£150 a year. Sounds great right?

But if you're looking to have a return on your investment it will take you around 17-23 years to get your initial payment back.

So what about these feed in tariffs, or FIT, what's happening next?

This was a government scheme created in 2010 and finished for new applicants in 2019 so there may be a lot of people still with the FIT scheme up to 2030.

This rate was guaranteed for the duration of your tariff and is index linked.

Not all suppliers offered this scheme.

What's really good to know is you can still change suppliers that meter & charge you for the electricity you take from the grid without it affecting your exporting FIT.

You might get a cheaper price with a company who doesn't even provide a FIT!

Likewise if you would prefer to end your FIT and start on the new scheme you can do this but it's likely that you will be getting less money per unit but worth looking into just in case.

This new scheme is the Smart Export Guarantee (SEG)

You will likely need a smart meter, or at least a meter capable of running half hourly reads. Currently the options are basic & simple but as technology develops there will be some interesting options layered in to optimise supply & demand - referenced in a previous blog here.

How much are we talking here? Anything from 1p a kWh to over 5p depending on who you are using.

Your supplier of energy will have it's own price for each kWh you're using but it's likely at the moment to be in the region of 21p so you can see the difference between buying and selling back! Don't forget the next OfGem price cap will be announced in August for the 1st October start date. This means that the price of energy is capped but as the wholesale market is insanely expensive just now, this winter could be a costly affair...

Might be a good idea to get in touch with me to talk over your current set up and likely changes for winter. Link below.

Being home during the day is a great use of your generated energy if you don't have batteries. If you're rarely at home during the day unless you get a battery then you won't benefit as much.

If you do have a battery that stores your unused generated electricity, under the new SEG, suppliers don't have to pay you for exporting it back but many will.

The type of battery you have will often denote which SEG tariff you can use - see links below for details on this, TESLA for instance is such a supplier of batteries.

It’s important to note that you aren’t obliged to sell your exported renewable electricity to your energy supplier.

By law, all SEG licensees must offer a tariff to every eligible household, irrespective of whether that household is a customer. (Of course, suppliers are entitled to offer a more favourable rate to customers).


Last paragraph quickly exploring Heat Source Pumps - a beginners guide.

Both air and ground source heat pumps need electricity to work but use the naturally occurring warmth from the air or the ground to create power to heat your home.

This video is a great intro.

Was that useful?

Any comments, questions or thoughts?

If you are on grid, partially or wholly and would like to talk to me about UW tariffs - because they are not on comparison sites so are a lovely independent option to add to your research - please book in a little time using the rather posh booking system below.

Many thanks and here is a long list of alternative reading sources - you might need a pot of coffee about now... or a gin


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