Smart Export Guarantee (SEG) 2025: How to Earn Money from Your Solar Panels

The Smart Export Guarantee (SEG) allows UK homeowners with solar panels to earn money by selling excess electricity back to the grid. With the right tariff, you can earn £100-£400 annually from electricity you're not using. This comprehensive guide explains how SEG works, compares the best tariffs, and shows you how to maximise your solar export income.

What is the Smart Export Guarantee?

The Smart Export Guarantee is a UK government scheme requiring licensed electricity suppliers (with 150,000+ customers) to offer tariffs that pay households for renewable electricity exported to the grid. Launched in January 2020, SEG replaced the original Feed-in Tariff (FIT) scheme for new solar installations.

Unlike the generous FIT payments of the past (which paid 40-50p per kWh), SEG rates are set by individual suppliers and typically range from 4p to 15p per kWh in 2025. While lower than FIT, SEG still provides valuable income that improves solar panel return on investment.

How SEG Works

When your solar panels generate more electricity than you're using, the surplus automatically flows to the national grid. Your export meter records this exported electricity, and your SEG supplier pays you based on your tariff rate.

The process is simple:

1. Solar panels generate electricity
2. Your home uses what it needs immediately
3. Excess electricity flows to the grid automatically
4. Your smart meter or export meter records exported units
5. Your SEG supplier calculates payment and credits your account

Who Qualifies for SEG Payments?

SEG is available to most homeowners with renewable generation systems, but there are specific requirements.

Eligibility Requirements

• Installation type: Solar panels, wind turbines, micro combined heat and power (CHP), hydro, or anaerobic digestion
• Capacity limit: Systems up to 5MW (all domestic solar systems qualify)
• MCS certification: Installation must be certified by the Microgeneration Certification Scheme
• Export meter: You need either a smart meter in export mode or a dedicated export meter
• Grid connection: System must be connected to the electricity grid

MCS Certification: The Non-Negotiable

MCS certification is mandatory for SEG eligibility. This ensures:

• Your installer meets quality standards
• Equipment is appropriately specified
• Installation follows best practices
• You receive warranty protection

Always verify your installer's MCS credentials before proceeding. Non-MCS installations cannot access SEG payments, regardless of how well they perform.

Do You Need a Smart Meter?

While not legally required, a smart meter makes SEG participation much easier. Smart meters in export mode track your exports in half-hourly intervals, enabling access to variable-rate and time-of-use tariffs that pay premium rates during peak demand.

Without a smart meter, you'll need a separate export meter installed, or some suppliers will estimate your exports (typically assuming 50% of generation is exported). Smart meters provide accurate data and access to better tariffs, making them highly recommended.

Best SEG Tariffs for 2025

SEG rates vary dramatically between suppliers, from token payments of 1-4p per kWh to competitive rates of 12-15p. Choosing the right tariff significantly impacts your returns.

Top Fixed-Rate SEG Tariffs

Variable and Time-of-Use Tariffs

Some suppliers offer variable SEG rates that change based on wholesale electricity prices or time of day. These can be lucrative but require more active management.

Octopus Outgoing Agile

This tariff pays wholesale electricity prices, which vary every 30 minutes. Rates typically range from 5p to 30p per kWh, with occasional peaks above 50p during high demand periods (winter evenings).

• Best for: Battery storage owners who can shift exports to peak periods
• Requires: Smart meter and active management
• Average income: 20-40% higher than fixed rates for optimized systems

Octopus Outgoing Flux

Designed for solar + battery systems, offering:

• Peak export rate: 24p per kWh (4pm-7pm)
• Off-peak export: 6p per kWh
• Paired with time-of-use import rates

How Much Can You Earn from SEG?

SEG income depends on your system size, location, export rate, and how much electricity you use during the day.

Typical Export Amounts

Most households export 40-60% of their solar generation, depending on usage patterns:

• Working household (empty during day): 55-65% exported
• Mixed usage: 45-55% exported
• Home all day / remote workers: 35-45% exported
• With battery storage: 15-30% exported

SEG Income Examples

Example 1: Small System, Standard Tariff

Example 2: Medium System, Premium Tariff

Example 3: Large System with Battery

Maximising Your SEG Income

While SEG income is valuable, the primary goal should always be maximising self-consumption first (you save 24.5p per kWh vs earning 10-15p from export). However, you can optimise export income through strategic choices.

1. Choose the Best Tariff for Your Situation

Don't automatically accept your energy supplier's SEG offer. Compare rates across providers:

• Without battery: Octopus Outgoing Octopus (15p) or Outgoing Fixed (12p) usually best
• With battery: Consider Outgoing Agile or Flux for time-shifting to peak rates
• Low engagement preference: Fixed-rate tariffs provide predictable income

You don't need to be an existing customer to sign up for most SEG tariffs. Octopus Energy, for example, offers SEG to non-customers.

2. Consider Battery Storage Strategically

Battery storage reduces exports (lowering SEG income) but dramatically increases self-consumption savings. The maths strongly favours batteries despite lower SEG payments:

• Export 1 kWh: Earn 10-15p
• Self-consume 1 kWh: Save 24.5p
• Benefit of battery: Extra 9.5-14.5p per kWh stored

For households exporting significant amounts, batteries deliver 50-100% better returns than maximising SEG payments.

3. Optimise Usage Patterns

If you don't have battery storage, shift electricity usage to daytime hours when solar generation peaks:

• Run washing machines, dishwashers between 10am-3pm
• Charge electric vehicles during peak solar hours
• Use timers to automate load shifting
• Preheat water tanks during sunny periods

Every kWh you self-consume instead of exporting delivers 9-14p of additional value.

4. Monitor and Switch Tariffs Regularly

SEG rates change as suppliers compete for market share. Review your tariff annually:

• Compare current rate to market leaders
• Switch if you can gain 2p+ per kWh (£40-£80 annual benefit)
• Most SEG contracts have no exit fees
• Switching typically takes 2-4 weeks

How to Sign Up for SEG

The SEG application process is straightforward but requires specific documentation.

Required Documentation

• MCS certificate: Provided by your installer after installation
• Export meter details: MPAN number and meter readings
• Proof of address: Recent utility bill or council tax statement
• Bank details: For payment credits

Application Steps

1. Complete Installation: Have your MCS-certified installer complete and commission your solar system. They'll provide your MCS certificate within 7-14 days.
2. Ensure Smart Meter is Configured: Your smart meter must be set to export mode. Contact your energy supplier if you're unsure.
3. Choose SEG Supplier: Research and select your preferred SEG tariff (can be different from your electricity supplier).
4. Submit Application: Apply online through your chosen SEG supplier's website, uploading your MCS certificate and meter details.
5. Approval: Most applications are approved within 2-4 weeks. You'll receive confirmation of your export rate and payment terms.
6. Start Earning: Payments typically begin from the date your application was submitted, not approved, so don't delay applying.

SEG Payment Terms

SEG payment structures vary by supplier, affecting cash flow and convenience.

Payment Frequencies

• Quarterly: Most common, payments every 3 months
• Monthly: Some suppliers (Octopus) offer monthly payments
• Annually: Less common, longer wait for payment

Payment Methods

• Credit to energy bill: Reduces your electricity/gas bill
• Bank transfer: Direct payment to your account
• Cheque: Some suppliers still offer this option

Bank transfers provide most flexibility, allowing you to use SEG income however you wish rather than being tied to energy bill credits.

Tax Implications of SEG Income

For most homeowners, SEG income is tax-free under current HMRC rules, provided:

• The solar system is installed at your primary residence
• Capacity is below 10kW (covers all domestic installations)
• The system is not part of a business operation

SEG payments for eligible systems are considered a "sale of surplus electricity" and exempt from income tax under current rules. However, if you have a particularly large system or multiple properties with solar, consult a tax professional to confirm your situation.

SEG vs Feed-in Tariff (FIT): What Changed?

Homeowners who installed solar before April 2019 may still be on the old Feed-in Tariff. Understanding the differences helps appreciate the current landscape.

Feed-in Tariff (Closed to New Applications)

• Paid for all generated electricity, not just exports
• Rates were 40-50p per kWh at scheme launch (2010)
• Guaranteed for 20 years
• Index-linked, increasing with inflation
• Created extremely favourable returns (5-10 year payback)

Smart Export Guarantee (Current)

• Pays only for exported electricity
• Rates set by suppliers (4-15p per kWh typical)
• No guaranteed contract length
• Rates can change (though you can switch suppliers)
• Still economically viable when combined with self-consumption

While SEG is less generous than FIT, falling solar installation costs (down 70% since 2010) mean solar remains financially attractive. The emphasis has shifted from export income to self-consumption savings, which aligns better with grid sustainability.

Future of SEG: What's Next?

The SEG scheme is likely to evolve as renewable generation increases and grid management becomes more sophisticated.

Potential Developments

• More time-of-use tariffs: Rewarding exports during peak demand with premium rates
• Grid balancing services: Homeowners with batteries providing grid stabilisation for additional payments
• Minimum rate guarantees: Government may introduce floor rates to ensure fair compensation
• Smart home integration: Automated export optimization based on grid signals

As battery storage becomes more affordable and widespread, homeowners will increasingly act as distributed energy resources, providing valuable grid services beyond simple export payments.

Making the Most of SEG

The Smart Export Guarantee transforms solar panels from pure cost-saving measures into income-generating assets. While SEG rates aren't as lucrative as the old Feed-in Tariff, they still provide valuable additional returns that improve solar ROI by 10-20%.

The key is viewing SEG income as a bonus on top of your primary benefit: reducing electricity bills through self-consumption. By maximising usage during solar generation hours, choosing competitive SEG tariffs, and considering battery storage for time-shifting, you can optimize both savings and income for maximum financial benefit.

With solar panel installations benefiting from 0% VAT and SEG providing ongoing income, there's never been a better time to invest in solar energy for your home.