I have recently installed some new solar panels to help reduce the overall cost of my energy bills in the long term.
I’m planning on selling my excess energy back to the grid, but I’m not sure how to get started and who I should consider selling it to.
How much will I get if I sell my extra energy and how do I get the best deal possible? A.R, via email.
Solar panel owners are able to sell their excess energy to the grid through the Smart Export Guarantee scheme, meaning households could earn up to £150 extra each year
Emilia Shovelin of This is Money replies: With the cost of energy hitting record highs, owners of solar panels may be expecting big money when they sell the excess power they generate back to the grid.
But while there is money to be made, the rates paid to solar panel owners are relatively poor in comparison – and there are significant set-up costs.
This makes it even more important that they get the best deal for the power they do sell.
Two years ago, the Government set up the Smart Export Guarantee scheme, essentially forcing larger suppliers to buy any surplus energy not used by homeowners in a bid to to encourage more households to go green with their energy.
Unfortunately for you, the scheme did not specify how much suppliers would pay for this excess energy, resulting in poor rates across the board.
And before you are able to sell your energy back to the grid, you will need to install a solar battery. This device will allow you to store excess energy, but it costs between £3,000 and £5,000 to install.
|Energy Supplier||Name of Tariff||Price per kWh|
|E.ON||Next Export Exclusive||5.5p|
|Scottish Power||Smart Export Variable||5.5p|
|British Gas||Export & Earn Flex||3.2p|
|Utility Warehouse||UW Smart Export Guarantee||2p|
If you do not have a way to store the energy you generate, you may end up with too much on a sunny day, and not enough on darker days, so it’s worth investing in a decent storage system.
Unfortunately, these big up-front costs mean you shouldn’t expect to make a profit on your solar investment for the first few years.
The good news is that you can still make money back by selling your energy. The average three- bedroom home could make up to £120 each year, coming out with an overall profit in the thousands over the course of your solar panels’ lifespan.
This, of course, is on top of the lower energy bills that you should be able to enjoy as a result of your investment.
Currently, Tesla, powered by Octopus Energy, pays the best rate for excess energy at a rate of 12p per kWh. EDF pays the lowest at 1.5p per kWh.
However, you need to pay around £9,000 to install a Powerwall 2 solar battery to access Tesla’s 12p per kWh rate.
The battery only has a 10-year warranty, and will need to be replaced around halfway through a solar panels’ 25-year lifespan.
This completely negates the benefits of Tesla’s higher tariff, with the average three-bedroom household losing £4,900 over 25 years on this rate.
That same home could make £8,600 over their panels’ lifespan by choosing Octopus’s 7.5p per kWh rate and a cheaper battery instead.
Octopus Energy currently offers the most competitive rate for excess energy at 7.5p per kWh, compared to EDF for 1.5p per kWh
Consumers will need to work out how much energy they are likely to generate, and which tariff will work best for them.
An additional hurdle is that you will probably need to be a customer of the provider you are looking to sell your excess power to.
Some companies offer alternative feed-in tariffs for non customers, but you will not be guaranteed to get the maximum rate for your energy.
For example, Octopus offers 4.2p instead of 7.5p per kWh to non-customers selling their energy.
Is it worth selling my energy back to the grid?
Energy companies say that they actually lose money when they buy back power from customers with solar panels, and claim this as the reason for the low rates paid.
A spokesperson from Octopus Energy said: ‘It’s important to note that due to the current grid set up of network admin, levies and distribution costs it’s usually net negative for us to offer any kind of export tariff.
‘We choose to give these best-in-market rates because we know that a future energy system is made up of many small generators and homes with their own energy sources.
‘We need to give people benefits when they switch to green, and make it the cheaper option. That’s why we offer such good rates on our tariffs.
This means it could make more sense to use the excess energy you generate yourself instead of selling it back to the grid, reducing your household bills every month.
If you do decide to sell energy back to the grid, you should consider the cost of your normal energy tariff with the individual provider, as well as the rate they pay when you sell energy back to them.
Speak to your current provider about your options and then shop around to find something that works for you.
The Octopus spokesperson added: ‘Renewable energy is already the cheapest source of electricity, with wind energy now costing 5p/kWh on average.
‘We need to keep going hell for leather on renewables and retailers need to make it cheaper for customers to install and run low carbon heating or small-scale renewable generation.
‘Together we can create an energy system that benefits people, their pockets and the planet.’
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