Should you Sell Energy Back to the Grid?
Selling energy back to the grid can bring a new income source and many other benefits for your business or household.
What is the National Grid and what do they do?
The National Grid is the largest electricity transmission and distribution business in the UK. They supply energy to England, Scotland and Wales, powering homes and businesses simultaneously.
The National Grid is a network of high-voltage power lines, gas pipelines, interconnectors, and storage facilities. These all ensure that all businesses and homes across the UK have enough power at all times. Within this huge network across the UK, there are smaller Distribution Network Operators (DNO), that send electricity from the grid to your home or business, if you want to know which specific DNO powers your home or business you can find it here.
How can you sell energy back to the grid?
To start selling your electricity back to the grid, you first need to start producing your own power. This can be done in a number of ways, for example, you could install solar panels on your roof or in a large space nearby your building. This will take the energy from the sun, start creating electricity, and if you have any left prior to your usage, you can sell this back to the grid.
Power Purchase Agreements (PPA) are a contract between a buyer and seller, the seller is the person or company who is generating power, and the buyer is usually a utility company or the National Grid that buys the energy and sells it to other customers.
You can sell your energy to these buyers on a fixed or flexible contract, meaning the price at which you sell your power could be the same for the entire contract, even if prices go way up or way down or the price at which you sell could vary throughout the contract, meaning you are affected by price changes and the volatility of the energy industry.
Benefits of selling energy back to the grid
There are many benefits to selling power back to the National Grid...
The main benefit would be the new source of funds you will receive from selling power back to the grid. This added source of income can help your business thrive as is it mainly passive once the installation and contracts have been completed, meaning you do not need to do anything for this income to be available.
Another benefit of selling power back to the grid is the generation of renewable energy and this being introduced to the energy mix. Renewable energy comes with its own range of benefits, including a reduction in costs and helping the environment along with pushing your business towards net zero.
By generating your own renewable energy, you will become energy independent, which means you do not rely on the grid or any other company to supply you with energy. This helps you save costs as the energy you produce will be for free and not follow the price of the industry’s ups and downs.
The Smart Export Guarantee (SEG) Scheme
The Smart Export Guarantee was launched on 1st January 2020, this scheme is a government-backed incentive which requires electricity suppliers, known as SEG Licensees, to pay small-scale generators, known as SEG generators, for low-carbon electricity which they export back to the National Grid, providing certain criteria are met.
This scheme works by determining a rate for the SEG Licensees, as well as the contract length and other terms which the SEG Generators will receive. SEG payments are calculated by using export meter readings. SEG Generators are paid by their chosen SEG Licensee for the electricity which they export back to the National Grid.
The scheme is for:
'Anyone with an installation of one of the following technology types up to a capacity of 5MW, or up to 50kW for micro-CHP – Solar photovoltaic(solar PV), wind, micro-CHP, hydro or anaerobic digestion (AD).'
How much can you make selling power back to the grid?
There can be a huge variety in what people can make when selling energy back to the grid. For example, there could be a company that has dedicated power generation which they only sell to the grid, and on the other hand, there could be a small manufacturing plant which sells its excess power back to the grid by using CHP.
To nobody’s surprise, the company which has dedicated land to selling power makes a much larger amount, but with the large cost of investment and running costs, this would cut into their selling profits and take longer to pay off.
Overall, it just depends on your circumstance and how much you can make through selling power back to the grid. Your contract, land usage, property size and energy usage could all play a part in the amount your company or household can make from selling energy back to the grid.
In conclusion, selling energy back to the grid can bring various benefits to businesses and households in the UK. By generating renewable energy, individuals can become more independent, save costs, and contribute to reducing carbon emissions.
The Smart Export Guarantee Scheme provides a government-backed incentive for small-scale generators to receive payments from electricity suppliers for low-carbon electricity exported to the National Grid. While the amount of money that can be made from selling energy back to the grid varies depending on individual circumstances, it can provide a new source of passive income for businesses and households.
