Solar Panel Tariffs

NimbleFins explains the two unusual energy tariffs you might come across if you have solar panels—SEG export tariffs (earning you money when you sell excess solar-generated power to the grid) and Time of Use tariffs (to charge a home battery, which is often a part of a solar PV system, at cheaper rates from the grid during the night). We also explain how a solar panel battery makes a difference in how you can benefit from these tariffs.

SEG Solar Export Tariffs

If you have solar and you're out of the house on a really sunny day, barely using any of your solar-generated energy as it's produced, what do you do with all that excess energy? You can:

  • Let it go to waste
  • Store it in a home battery
  • Sell it back to the grid via a SEG tariff

The Smart Export Guarantee (SEG) enables homes or businesses with renewable energy (primarily solar PV panels) to get paid for exporting excess renewable electricity back to the grid. A SEG tariff essentially means that you can earn money on your excess solar power.

The government-backed SEG dates back to 1 January 2020. If you're a home owner with solar, you're a 'SEG Generator'. SEG Licensees (energy suppliers) pay SEG Generators for low-carbon electricity which they export back to the National Grid—providing certain criteria are met.

What are SEG requirements?

Not everyone with renewable energy generation can apply for a SEG tariff. To sign up, you'll need to:

  • Have a renewable electricity generating system that meets the SEG eligibility requirements.
  • Have a smart meter capable of providing half-hourly export readings.
  • Show that your installation and installer are certified through the microgeneration certification scheme (MCS) or equivalent.
  • NOT be receiving export payments under the old Feed-in Tariff (FiT) scheme.
  • Be located in Great Britain.
  • Have total installed capacity <= 5MW or <= 50kW for micro-CHP.

Is a SEG tariff worth it?

In our opinion, if you have solar WITH a home battery, you're probably better off storing excess solar power in the battery (to use later in your own home) rather than sell it back to the grid on a SEG tariff. Why? Because SEG rates are so low.

For example, the Octopus SEG tariff means you earn 4.1p/kWh on electricity you sell back to the grid. But this is a LOT lower than the cost of buying electricity (~24.5p/kWh). You don't get very much for selling electricity.

But there may be cases where it still makes sense to sell electricity on a SEG tariff even if you have a home battery—primarily if you are generating more than you can use. For instance, if you're away on holiday and not able to use electricity stored in your battery, then it's probably better financially to sell that excess electricity.

On the other hand, if you have solar WITHOUT a home battery, then having a SEG tariff is sensible. That way, if there are ever times where you aren't using up 100% of your solar-generated power you can sell what you don't use back to the grid. You won't earn much (e.g. 4.1p/kWh) but it's better than nothing!

Time of Use Tariffs

A Time of Use (TOU) tariff is an electricity pricing plan that has cheaper rates at certain times of the day (usually during the middle of the night), and more expensive rates at other times of the day (usually during late afternoon through evening).

Time of Use electricity is usually:
  • CHEAPER in the middle of the night
  • MORE EXPENSIVE in the late afternoon/early evening

The cheaper TOU rates are generally at night, when electricity demand is lower; and the more expensive TOU rates are generally during the day, especially late afternoon and early evening, when electricity demand is at its highest.

Energy companies offer Time of Use tariffs to encourage consumers to use more electricity when nationwide demand is lower, and discouraging consumers from using so much electricity during peak times.

Why do they do this? A few reasons. Primarily, reducing peak demand can lower the pressure on UK energy infrastructure (i.e. the National Grid) and help avoid brown outs.

Time of Use tariff example

We quoted a Time of Use tariff from Octopus for our area and found that the rate paid during most of the day was pretty typical right now at 29.7p/kWh. But the rate was 40% higher for three hours in the late afternoon/evening (4pm - 7pm) and 40% lower for three hours in the middle of the night (2am - 5am).

This is a perfect example of a typical Time of Use tariff—regular rates most of the day, with cheaper rates during low-demand nighttime hours and higher rates during high-demand early evening hours.

Chart showing rates for a time of use tariff example

Why is 4pm through 7pm a peak time for electricity consumption? It's when many households are getting home from work or school, and most households are starting to warm up and light their homes and cook dinner.

How a Time of Use tariff relates to solar panels

It's quite common to include a home battery along with a solar panel installation.

If you have a home battery in a solar setup, the battery can be charged in two ways:

  • From Solar: Excess solar-generated power that is not immediately used by the home can be directed to charge the home battery.
  • From the Grid: The home battery can be charged from the grid; ideally, this is done during the night on a cheaper Time of Use tariff, when you'll typically pay at least 40% less for grid energy.

So, if you have a Time of Use tariff you set the home battery in your solar panel system to charge from the grid at night when prices are cheapest, then use this electricity during peak times of the day when prices are higher. 

Other ways to use a TOU tariff

In addition to charging a solar PV system home battery, there are also some other uses for a Time of Use tariff:

  • Charging an EV on TOU tariff: You can also charge an EV on the cheapest nighttime TOU rates, which can bring the cost down to as little as 2.4p per mile (compare this to the ~15p per mile fuel cost of a petrol car).
  • Use high-energy appliances at night. Use appliances such as a washing machine, tumble dryer or dishwasher at night when there's a cheap TOU rate to save money on your energy bills. These high-energy appliances can cost quite a lot to run on a standard tariff.  
  • Use electric heating. Heating contributes to a large chunk of energy bills, especially in winter. While gas heating is typically cheaper to run than electric heating, you may find that a TOU tariff means you can save money by using electric heating, if you time your heating to come on during the hours when rates are cheapest. 

Solar panel costs

With the cost of solar panels reaching around £1,800 per kW of power, the typical 4kW installation will cost around £7,000, give or take. Read more about costs for different size systems and to see real-life quotes we received in our article analysing the cost of solar panels in the UK.