Understanding Your Feed In Tariff Prices
For homeowners and businesses generating their own renewable electricity, understanding the value of feeding surplus power back into the national grid is paramount. In the United Kingdom, the primary mechanism for this is the Smart Export Guarantee (SEG). The 'feed in tariff prices' you'll encounter today are essentially the rates offered under the SEG scheme. These rates are not fixed by the government but are set by individual electricity suppliers, meaning they can vary significantly from one provider to another.
The core idea is simple: you generate electricity from a renewable source, like solar panels. You use what you need, and any excess is exported. Your chosen electricity supplier then pays you a price for this exported energy. This price is your 'feed in tariff price', and it directly impacts the financial viability and return on investment for your renewable energy system. It’s vital to realise that while the original Feed-in Tariff (FiT) scheme closed to new applicants, the SEG has taken its place, ensuring you still get paid for exported power.
Many factors influence these prices. The most significant is the wholesale electricity market price, as suppliers often base their SEG rates on this. However, suppliers also factor in their own operational costs and profit margins. Some may offer a flat rate, while others might have dynamic pricing linked to specific times of day, reflecting grid demand. This makes comparing offers a critical step before committing.
The key takeaway is that feed in tariff prices are set by your energy supplier, not a universal government rate, and require active comparison.
Navigating the Smart Export Guarantee (SEG) Rates
What to Look for in SEG Tariffs
When you're looking into feed in tariff prices, you're essentially researching SEG tariffs. The first thing to check is whether the supplier offers a tariff that suits your generation profile. Some tariffs offer a single, fixed rate for all electricity exported, regardless of the time of day. This is straightforward and predictable. Others, however, offer variable rates, often higher during peak demand hours and lower during off-peak times. If you have a system that allows you to control when you export, or if your generation is naturally higher at certain times, a variable rate might yield more income.
Another crucial aspect is the contract length and any exit fees. Some suppliers might tie you into a longer contract, potentially locking you into a rate that becomes less competitive over time. Always check the terms and conditions for any penalties if you decide to switch suppliers before the contract ends. It’s also worth noting that some suppliers might impose minimum export levels or have specific meter requirements, such as requiring a smart meter. Ensure your installation meets any supplier-specific criteria before you apply.
A common pitfall is not factoring in the supplier's unit price for electricity you *buy* from the grid. While you want the highest export price, you also want a competitive price for your import electricity. Some suppliers might offer a very attractive export rate but charge significantly more for the power you consume, negating the benefit. Therefore, a comprehensive seg tariff comparison involves looking at both your import and export rates together.
The most effective way to secure favourable feed in tariff prices is to treat your renewable energy export like any other commodity: shop around for the best market rate.
Do your homework on typical export volumes for a system like yours in your location. This helps you estimate potential earnings more accurately with different tariff structures, rather than just chasing the highest advertised rate.
Making the Most of Your Exported Energy
Choosing the right feed in tariff prices is only part of the equation. Maximising your income from exported electricity also depends on how you manage your energy usage and generation. For instance, if your supplier offers higher rates at certain times, try to shift your high-demand activities, like running washing machines or charging electric vehicles, to those periods. This way, you consume less from the grid when prices are high and export more when rates are favourable.
Consider the long-term implications. While current feed in tariff prices are important for immediate returns, think about how they might evolve. The energy market is dynamic, and regulatory changes can occur. Some suppliers offer longer-term fixed rates, which can provide stability, while others are more responsive to immediate market fluctuations. Your decision should align with your personal risk tolerance and financial planning for your renewable energy investment.
Ultimately, the 'best' feed in tariff prices are those that offer the most beneficial combination of export rate, import cost, contract flexibility, and suitability for your specific generation and consumption patterns. It requires a proactive approach to research and comparison, rather than accepting the first offer you see.
The goal is to find a feed in tariff scheme that balances immediate payment with long-term value.