The Smart Export Guarantee pays UK businesses for electricity their solar installations export to the grid. It’s a useful income stream, and one that’s worth understanding properly, both to maximise what you earn and to avoid building your investment case around figures that don’t hold up in practice.
This guide covers how the smart export guarantee commercial solar scheme works, what your business needs to qualify, what the rates actually look like for commercial operators, and where SEG income sits within a realistic return on investment calculation. If you’re at the stage of evaluating a commercial solar installation, our team can model SEG income alongside the full financial picture for your site.
What the SEG is and How it Replaced the Feed-In Tariff
The Feed-in Tariff closed to new applicants in April 2019. It paid both for electricity generated and exported, with rates set by the government and guaranteed for 20 years. The Smart Export Guarantee, which launched in January 2020, replaced the export payment element only. There is no generation payment under SEG.
Under SEG, Ofgem-licensed electricity suppliers with 150,000 or more domestic customers are legally required to offer at least one export tariff to eligible generators. Critically, the rate is set by suppliers competing in the market rather than fixed by the government. This means rates vary significantly between suppliers and can change over time. The government guarantee is that the rate must be above zero; the actual rate depends on which supplier you choose and what tariff you negotiate.
This market-driven structure means SEG rewards businesses that shop around and review their tariff regularly, unlike the FiT which locked in a rate for the life of the installation.
Eligibility: What Your Business Needs to Qualify
Three requirements gate access to SEG for commercial operators, and all three need to be in place before you can register.
1. MCS-accredited installation
The system must be installed by an MCS-certified contractor. SEG eligibility is one of the practical reasons MCS certification matters beyond quality assurance — an installation completed by a non-certified contractor can’t be registered for SEG regardless of how it performs. This applies to the installation itself, not just the equipment. Our team holds MCS certification as standard.
2. Generating capacity under 5MW
The scheme covers installations up to 5MW, which encompasses the large majority of commercial rooftop solar. A 5MW system is equivalent to roughly 12,500 standard panels, so this limit is not a constraint for most commercial operators.
3. Smart meter capable of half-hourly export measurement
SEG requires a smart meter that can record exports in half-hourly intervals. Most commercial sites operating on half-hourly metered supply already have compatible metering. For sites without it, the supplier arranges installation as part of the SEG registration process. Without a compatible smart meter, registration can’t proceed.
For larger commercial installations — typically those connecting above 16A per phase — DNO approval under G99 is also required before the system can export to the grid. Your installer should manage the G99 application as part of the installation process, but it’s worth confirming this is in hand before the system is commissioned.
How SEG Rates Work and What Businesses Can Earn
SEG tariff rates for commercial operators currently sit lower than the equivalent residential rates, where the most competitive suppliers offer up to 15p per kWh. For business customers, standard fixed commercial SEG tariffs typically run between 3 and 8p per kWh, with the best available commercial rates reaching around 15p per kWh from selected suppliers such as EDF’s small business export tariff. Time-of-use tariffs can pay more during peak demand periods but require active management and compatible metering.
Fixed tariffs offer predictability: the rate is set for the contract term, typically 12 to 36 months, and payments arrive quarterly based on metered export. Variable tariffs track wholesale prices and can yield more at peak times but carry more volatility. For most commercial operators focused on planning rather than optimisation, a competitive fixed tariff is the practical choice.
To illustrate the income at different system sizes, assuming 20% of generation is exported and a fixed rate of 7p per kWh:
- A 50kWp system generating around 45,000 kWh per year exports approximately 9,000 kWh — earning roughly £630 annually at 7p.
- A 100kWp system generating around 90,000 kWh exports approximately 18,000 kWh — earning roughly £1,260 annually at 7p.
- At the best available commercial rate of 15p per kWh, those figures rise to £1,350 and £2,700 respectively.
Rates change and the figures above are illustrative, so make sure to check current tariffs via Ofgem’s published comparison before registering, and review your tariff annually.
It’s also worth noting that SEG income is likely to be taxable for commercial operators, unlike the domestic microgeneration exemption which applies to systems up to 50kW for homeowners. Ensure you confirm the tax treatment with your accountant before including SEG income in financial projections.
SEG Income in Your Commercial Investment Case
This is the section that matters most if you’re building a business case. SEG income is real, it accrues throughout the life of the installation and it should be included in your payback model — but it is a secondary line, not the headline number.
The reason is straightforward — every unit of electricity your system generates and consumes on-site displaces grid electricity at your full import tariff rate, currently around 24 to 28p per kWh for most commercial sites. Every unit you export earns the SEG rate — typically 3 to 15p per kWh depending on the tariff you secure. The self-consumption saving is three to four times more valuable per unit than the export income.
To put this in concrete terms: a 100kWp system generating 90,000 kWh per year, with 80% self-consumption and 20% export at 7p SEG rate, produces annual savings and income of approximately:
- Self-consumption saving (72,000 kWh × 26p): ~£18,720
- SEG export income (18,000 kWh × 7p): ~£1,260
- Total: ~£19,980
The SEG income in this example represents around 6% of the total annual return. Optimising self-consumption — through system sizing, operating hours and battery storage — has a far greater effect on payback than optimising the SEG rate.
This doesn’t make SEG income unimportant. On a 25-year system lifetime, even £1,000–£2,000 per year compounds into a meaningful contribution to whole-life return. The point is that a system designed to maximise export at the expense of self-consumption will underperform. For more on how this plays out across the full investment case, our guide on whether solar panels are worth it covers the wider picture.
SEG and Financing Structure: What Changes if You Use a PPA
If your solar installation is financed through a Power Purchase Agreement, the third party that owns the system also owns the electricity it generates — and with it, the SEG entitlement. Businesses on PPAs pay the PPA provider for the electricity they consume on-site and can’t claim SEG payments directly.
This is a material consideration when comparing financing routes. Outright purchase and asset finance both preserve your ownership of the installation and therefore your SEG entitlement. A PPA transfers it. Where SEG income is meaningful to the investment case — particularly on larger systems with significant export volumes — this distinction should be factored into the financing comparison before a decision is made.
Registering and Managing Your SEG Tariff
Once your system is installed and certified, registration is straightforward. You’ll need your MCS certificate, your G99 approval letter if applicable, your smart meter details and your bank account information for payments.
The process runs as follows: choose a supplier offering a business SEG tariff and compare their rates via Ofgem’s published list; submit your application with the required documents; the supplier arranges any metering changes needed; and payments begin once the export meter is set up and readings are being collected, typically on a monthly or quarterly basis.
You’re not obliged to use your existing electricity import supplier for SEG. You can hold separate contracts for import and export, which means you can shop for the best available SEG rate independently of your existing supply arrangement. Some suppliers offer better rates to customers who hold both contracts with them, so it’s worth checking both options.
Review your SEG tariff annually — rates move with wholesale prices and competitive pressures, and switching is straightforward with 30 to 90 days notice depending on your contract terms.
Our PV system and battery storage case study and reducing electricity costs case study both show how SEG income is modelled alongside self-consumption savings in a real commercial installation.
Get a quote and we’ll include a site-specific SEG income projection as part of the financial model for your installation.