Net Metering vs. Feed-in Tariffs: What Solar Owners Should Know

One of the most common questions we hear from people considering solar — or who already have it installed — is how the export side of the equation works. What happens to the electricity your system generates but you do not use? Who pays you for it, and how much?

The answer has changed over the years, and there is some international terminology that can cause confusion for UK owners. Here is a clear picture of where things stand.

What Is Net Metering?

Net metering is a billing arrangement used widely in the United States and some other markets. Under net metering, any electricity you export to the grid is directly offset against the electricity you import — effectively running your meter backwards. You only pay for your "net" consumption.

True net metering does not exist in the UK. Instead, the UK has its own distinct arrangement for solar exports, which has evolved over time.

The Feed in Tariff

The Feed in Tariff, which ran from 2010 until it closed to new applicants in March 2019, was the UK's main mechanism for compensating solar owners for their generation and export.

Under the Feed in Tariff, participants received a guaranteed generation tariff for every kilowatt hour their system produced, plus a separate export tariff for electricity sent to the grid. Both payments were inflation linked and guaranteed for 20 years, making it an exceptionally attractive scheme.

If your system was installed before April 2019 and registered under the Feed in Tariff, you will continue receiving those payments for the remainder of your agreement. They are not affected by new arrangements.

The Smart Export Guarantee

For systems installed from January 2020 onwards, the relevant mechanism is the Smart Export Guarantee, or SEG. Under the SEG, licensed energy suppliers with more than 150,000 customers are obliged to offer an export tariff to eligible solar owners.

Unlike the Feed in Tariff, the SEG does not prescribe the rate — suppliers set their own, and these vary. At the time of writing, export rates range from around 4 pence to 15 pence per kilowatt hour depending on the supplier and tariff type. Some tariffs are fixed, others are variable, and some are tied to smart meter readings to pay you more at times of peak grid demand.

To benefit from the SEG, you need a smart meter that can record half hourly export data.

How to Maximise Your Export Value

The most straightforward way to reduce what you export — and therefore maximise self consumption — is to shift energy intensive tasks to daylight hours: running the dishwasher, washing machine, or electric vehicle charger during the middle of the day when your panels are producing most.

Adding battery storage takes this further, allowing you to store excess generation and use it in the evening rather than exporting it at a lower rate and importing from the grid later at a higher one.

For most households, the maths favours self consumption over export. A unit you use yourself saves you the full import rate. A unit you export earns you the SEG rate — typically lower.

What Should You Do?

If you are on the old Feed in Tariff, ensure you are receiving your payments correctly and check whether your export is being accurately metered. If you are on the SEG, shop around — export tariffs vary enough to make a meaningful difference over a year.

If you are considering a new solar installation, Freedom Energy will walk you through your current export options and help you design a system that maximises both self consumption and any export return.