The UK Government is seeking views on the introduction of a mandatory supplier-led route to market for small-scale low-carbon generation: the Smart Export Guarantee (SEG), in a consultation that reflects extensive work in this area by the Solar Trade Association (STA).
The consultation, published by the Department for Business, Energy and Industrial Strategy (BEIS) considers future arrangements that would facilitate:
A route to market which supports small-scale low carbon generation of electricity
Lowering of costs for consumers
The promotion of the efficient use of electricity through price signals, for instance promoting export when the grid is experiencing high demand
Under the Smart Export Guarantee (SEG), government would legislate for suppliers to remunerate small-scale low-carbon generators for the electricity they export to the grid. The evidence gathered from this consultation will allow government to decide on whether, and how, to proceed with the SEG. This consultation is a result of a call for evidence.
An impact assessment is included as part of the consultation. The expected impacts are presented as a range to reflect the fact there is no central forecast.
The consultation will consider how a replacement for the export tariff could work. It reflects extensive work carried out by the STA, working with innovative suppliers and battery storage providers, on the current barriers to market offers for the small volumes of power coming from new solar homes.
“We give these proposals a cautious welcome” said STA CEO Chris Hewett. “We are very pleased the Government is unequivocal; small generators will be compensated for the power they contribute to the system, but the issue remains providing remuneration at a fair market rate. We are particularly pleased to see a clear requirement to meet MCS standards for participation in the scheme, which means safeguards for consumers will be retained.
Positively, the Government again identifies the System Sell Price as accurately reflecting the market value of power spilled to the grid. However, the consultation acknowledges many of the market barriers the STA has raised with Government and the associated costs. However, the STA worries that these may impede the ability of suppliers to offer fair and meaningful rates, even though they may wish to. Customers are freely able to switch suppliers in a competitive market so where these costs fall remains vital to developing meaningful offers.
Nevertheless, the STA believes that this is a good basis for consultation, even though ‘the devil really is in the detail’ here. The STA is hoping very much hope that the Government will listen very carefully to the responses to the consultation, as they were urged to do by Douglas Ross MP at BEIS Orals today.