Suppliers sell electricity for at least 28p a unit, yet buy power from our solar panels for peanuts
Homeowners with solar panels are getting rock bottom rates for the electricity they sell to the grid despite the record high prices paid by energy customers.
The government set up the Smart Export Guarantee scheme two years ago, forcing larger suppliers to buy any surplus energy not used by homeowners. The idea was that allowing people to make money from selling surplus electricity back to the grid would make them more willing to go green and install solar panels, which can cost up to £6,000.
The scheme did not dictate how much suppliers had to pay for the energy, and the assumption was that competition among suppliers would drive up prices. But the French supplier EDF now pays just 1.5p per kilowatt hour (kWh) for energy it buys, compared with the 28p/kWh it charges customers to buy its energy under the price cap, which limits costs for customers on standard variable tariffs. Utility Warehouse pays 2p/kWh, British Gas 3.2p and Shell and SSE 3.5p. Ovo pays 4p/kWh, according to the Eco Experts, a consumer advice site. Eon pays 5.5p and Octopus Energy’s fixed export tariff is 7.5p.
All this means that it now makes more sense to use the energy yourself to power your home instead of selling it to a supplier for, at best, a quarter of what you buy it for. However, you will need a solar battery, which costs between £3,000 and £5,000, so that you can store excess energy.
If you do not have a way of storing the energy generated by your panels you end up with too much on a sunny day, and not enough on darker days, so you have to top it up with power from the grid. A battery means that instead of having to sell excess power to a supplier for a pittance, you can use it yourself and avoid paying the high prices that those very same suppliers will charge you for energy. Win-win.
The Smart Export Guarantee was an expanded version of the old Feed-In Tariff scheme, which closed to new applicants in April 2019 and paid householders with solar panels a set rate for excess energy. This was about 53p/kWh in 2010, but was down to less than 4p by 2019. The government wound it down, believing that energy companies would want to compete with each other to buy renewable energy from customers as demand grew, creating a marketplace.
At least a million homes now have solar panels. The Microgeneration Certification Scheme, a standards body for the low-carbon industry, said that solar panel owners send about £106 million of energy to the grid every year using the Smart Export Guarantee scheme.
The consumer group Which? found that while only 6 per cent of solar panel owners had a battery in 2019, 74 per cent were considering getting one.
“On sunny days you won’t use about 50 per cent of the electricity you generate, and given the current state of energy prices that’s extremely lucrative power that you should store and harness,” said Charlie Clissitt, the editor of the Eco Experts.
Energy prices are likely to remain high for at least two years and you could recoup the £4,000 cost of a battery within six or seven years, Clissitt said. Some batteries can store about 10kWH, which is about five days’ worth of energy for the typical three-bedroom home.
The chancellor, Rishi Sunak, abolished VAT on residential solar panels and batteries for five years in his spring statement on March 23. Sunak said this would cut installation costs by £1,000.
Some high-capacity solar batteries are about the size of a small kitchen fridge, so be ready to give over some room – especially if you get one that cannot be placed outside. Lithium-ion batteries are the most popular. This is the same technology used for smartphones and other high-tech batteries.
Gabriel Wondrausch, director of SunGift Solar, based in Exeter, said the demand for batteries to be installed with solar panels had soared and that his company was having to order batteries from Tesla, the electric car company, which also makes solar panels.
“Five or six years ago hardly anyone wanted to get batteries, either with their solar panels or as retrofits,” he said. “Now 60 per cent of people want panels with batteries. We are in completely new territory. Quite often we are suggesting to people that we fit their solar system now and then retro-fit their batteries at a later date. There simply aren’t enough to go round.”
The company has added 12 extra staff to its workforce of 40 since the middle of last year.
How much power your solar panels will generate depends on where you live because of the hours of daylight you get. If you live in the south of England, for example, you are likely to save the most money on your bills because there is more sunshine there than anywhere else.
The southwest of England has the most sources of renewable energy of any region in the UK, with more than 123,000 from commercial and residential sites. Of these, more than 8,000 are in Cornwall.
Cornwall is doubly suitable because it has lower temperatures than other southern UK regions, which means the panels have less chance of overheating. According to the Eco Experts, panels should operate at an optimum temperature of 25 degrees centigrade. Anything higher and they risk overheating and malfunctioning.
Aside from Cornwall, solar panels are most popular in the southeast and east of England, Yorkshire and Humberside. The further north you go, the smaller the savings and the longer it will take for your installation cost to pay itself back.
If I had solar panels and excess electricity I would sell it to my neighbours. Oh wait, can’t do that as it’s illegal. You have to sell it to the grid for peanuts and then your neighbours can buy it for a fortune.
The Export Price for “little generators” was fixed in 2010. Surprise. It fell precipitously and made it uneconomical to install solar voltaics. Largely, the “big suppliers” get free electricity and then resell it at pure profit. The whole scandalous fiasco has been repeatedly adjusted to keep “little generators” from ever making a profit. The problem with the green economy is the number of grifters in the boardrooms of existing energy companies.
Absolutely ridiculous that we’re forced to pay stupid money for renewables because of how the bidding system works (everything costs the same as the most expensive fuel) but that doesn’t apply to solar panels on our own homes
The drop in export price of power means the energy companies are making an awful lot of money on power they had very little to do with. This very poor export price is making solar not worth purchasing as the pay back period has gone well past 15 years now. A battery brings that payback period down to around 10 years but at which point you are expecting to replace the invertor and the battery also runs out of warranty and will likely need replacement as well. Its looking like at least in todays money energy export price means solar doesn’t save much money and this is very bad news for the continued roll out of the technology, its just too expensive with a battery as well. I think it will be cheaper over 25 years due to inflation and such but its not a fantastic deal because the energy companies are profiting so enormously from your power.
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Suppliers sell electricity for at least 28p a unit, yet buy power from our solar panels for peanuts
Homeowners with solar panels are getting rock bottom rates for the electricity they sell to the grid despite the record high prices paid by energy customers.
The government set up the Smart Export Guarantee scheme two years ago, forcing larger suppliers to buy any surplus energy not used by homeowners. The idea was that allowing people to make money from selling surplus electricity back to the grid would make them more willing to go green and install solar panels, which can cost up to £6,000.
The scheme did not dictate how much suppliers had to pay for the energy, and the assumption was that competition among suppliers would drive up prices. But the French supplier EDF now pays just 1.5p per kilowatt hour (kWh) for energy it buys, compared with the 28p/kWh it charges customers to buy its energy under the price cap, which limits costs for customers on standard variable tariffs. Utility Warehouse pays 2p/kWh, British Gas 3.2p and Shell and SSE 3.5p. Ovo pays 4p/kWh, according to the Eco Experts, a consumer advice site. Eon pays 5.5p and Octopus Energy’s fixed export tariff is 7.5p.
All this means that it now makes more sense to use the energy yourself to power your home instead of selling it to a supplier for, at best, a quarter of what you buy it for. However, you will need a solar battery, which costs between £3,000 and £5,000, so that you can store excess energy.
If you do not have a way of storing the energy generated by your panels you end up with too much on a sunny day, and not enough on darker days, so you have to top it up with power from the grid. A battery means that instead of having to sell excess power to a supplier for a pittance, you can use it yourself and avoid paying the high prices that those very same suppliers will charge you for energy. Win-win.
The Smart Export Guarantee was an expanded version of the old Feed-In Tariff scheme, which closed to new applicants in April 2019 and paid householders with solar panels a set rate for excess energy. This was about 53p/kWh in 2010, but was down to less than 4p by 2019. The government wound it down, believing that energy companies would want to compete with each other to buy renewable energy from customers as demand grew, creating a marketplace.
At least a million homes now have solar panels. The Microgeneration Certification Scheme, a standards body for the low-carbon industry, said that solar panel owners send about £106 million of energy to the grid every year using the Smart Export Guarantee scheme.
The consumer group Which? found that while only 6 per cent of solar panel owners had a battery in 2019, 74 per cent were considering getting one.
“On sunny days you won’t use about 50 per cent of the electricity you generate, and given the current state of energy prices that’s extremely lucrative power that you should store and harness,” said Charlie Clissitt, the editor of the Eco Experts.
Energy prices are likely to remain high for at least two years and you could recoup the £4,000 cost of a battery within six or seven years, Clissitt said. Some batteries can store about 10kWH, which is about five days’ worth of energy for the typical three-bedroom home.
The chancellor, Rishi Sunak, abolished VAT on residential solar panels and batteries for five years in his spring statement on March 23. Sunak said this would cut installation costs by £1,000.
Some high-capacity solar batteries are about the size of a small kitchen fridge, so be ready to give over some room – especially if you get one that cannot be placed outside. Lithium-ion batteries are the most popular. This is the same technology used for smartphones and other high-tech batteries.
Gabriel Wondrausch, director of SunGift Solar, based in Exeter, said the demand for batteries to be installed with solar panels had soared and that his company was having to order batteries from Tesla, the electric car company, which also makes solar panels.
“Five or six years ago hardly anyone wanted to get batteries, either with their solar panels or as retrofits,” he said. “Now 60 per cent of people want panels with batteries. We are in completely new territory. Quite often we are suggesting to people that we fit their solar system now and then retro-fit their batteries at a later date. There simply aren’t enough to go round.”
The company has added 12 extra staff to its workforce of 40 since the middle of last year.
How much power your solar panels will generate depends on where you live because of the hours of daylight you get. If you live in the south of England, for example, you are likely to save the most money on your bills because there is more sunshine there than anywhere else.
The southwest of England has the most sources of renewable energy of any region in the UK, with more than 123,000 from commercial and residential sites. Of these, more than 8,000 are in Cornwall.
Cornwall is doubly suitable because it has lower temperatures than other southern UK regions, which means the panels have less chance of overheating. According to the Eco Experts, panels should operate at an optimum temperature of 25 degrees centigrade. Anything higher and they risk overheating and malfunctioning.
Aside from Cornwall, solar panels are most popular in the southeast and east of England, Yorkshire and Humberside. The further north you go, the smaller the savings and the longer it will take for your installation cost to pay itself back.
If I had solar panels and excess electricity I would sell it to my neighbours. Oh wait, can’t do that as it’s illegal. You have to sell it to the grid for peanuts and then your neighbours can buy it for a fortune.
The Export Price for “little generators” was fixed in 2010. Surprise. It fell precipitously and made it uneconomical to install solar voltaics. Largely, the “big suppliers” get free electricity and then resell it at pure profit. The whole scandalous fiasco has been repeatedly adjusted to keep “little generators” from ever making a profit. The problem with the green economy is the number of grifters in the boardrooms of existing energy companies.
Absolutely ridiculous that we’re forced to pay stupid money for renewables because of how the bidding system works (everything costs the same as the most expensive fuel) but that doesn’t apply to solar panels on our own homes
The drop in export price of power means the energy companies are making an awful lot of money on power they had very little to do with. This very poor export price is making solar not worth purchasing as the pay back period has gone well past 15 years now. A battery brings that payback period down to around 10 years but at which point you are expecting to replace the invertor and the battery also runs out of warranty and will likely need replacement as well. Its looking like at least in todays money energy export price means solar doesn’t save much money and this is very bad news for the continued roll out of the technology, its just too expensive with a battery as well. I think it will be cheaper over 25 years due to inflation and such but its not a fantastic deal because the energy companies are profiting so enormously from your power.