Selling Electricity from a Wind, Hydro or CHP Generator

The Smart Export Guarantee (SEG) lets small-scale generators receive payments from electricity suppliers for the electricity they export back to the National Grid, provided certain criteria are met¹. It came into force on 1 January 2020 under the Smart Export Guarantee Order 2019, replacing export payments under the closed Feed-in Tariff scheme, and it requires electricity suppliers to pay small-scale generators for the low-carbon electricity they export². The scheme is a government-backed initiative administered by Ofgem, and it applies to installations located in Great Britain³.

For a household with a wind turbine, a micro hydro scheme or a micro-CHP unit, the SEG is the main route to being paid for surplus generation. The scale of the scheme is substantial: SEG generators exported 443.1 GWh of low-carbon electricity during 2024 to 2025, enough to power over 160,000 typical UK homes, and the average tariff rate offered during SEG Year 5 was 10.8p per kWh⁴. What the SEG does not do is guarantee a particular price. Suppliers set their own rates, and those rates vary enormously, from a fraction of a penny to rates comparable with what you pay for imported electricity.

What the SEG pays for, and who has to offer it

The SEG exists to make sure that small-scale generators are paid for the renewable electricity they export to the grid. It requires certain licensed electricity suppliers, known as SEG Licensees, to offer a tariff and pay eligible generators for the electricity they export back to the National Grid⁷. Not every supplier is obliged to participate, but all licensed electricity suppliers are required to declare their SEG status on an annual basis, so the list of companies currently offering tariffs is publicly known⁷.

The legal foundation matters because it sets the floor of the scheme. The Smart Export Guarantee Order 2019 provides for payments by mandated electricity suppliers to small-scale low-carbon generators exporting electricity to the grid, and eligible generators must be paid a price above zero pence per kWh of exported electricity, provided the amount exported is metered and registered for settlement⁸. In other words, no SEG tariff can pay nothing, but beyond that single floor, the market sets the price.

Payments are calculated using export meter readings, and generators are paid by their chosen SEG Licensee³. That licensee does not have to be the supplier the household buys its electricity from, which means the export tariff can be shopped for separately from the import tariff. Certain licensed energy suppliers are required to offer these tariffs, so generators can choose the one that suits them⁹.

For energy independence, the SEG changes the economics of generating at home without removing the grid from the picture. A household that exports is still dependent on a supplier to buy its power, on the grid connection itself, and on tariff rates it does not control. The scheme rewards surplus generation rather than self-consumption, and the rates on offer are generally below import prices, so the financial case for a wind, hydro or CHP installation rests mostly on the electricity the household uses itself, with export income as a secondary benefit.

Wind, hydro, micro-CHP and the 5MW limit: what qualifies

The eligible technologies are defined in the scheme rules. SEG generators must use one or more of the following in their installation: anaerobic digestion (AD), hydro, micro-combined heat and power (micro-CHP), onshore wind, and solar photovoltaic (PV)⁴. The same list appears in Ofgem's scheme rules: solar PV, wind, micro-CHP, hydro and anaerobic digestion, with installations up to a capacity of 5MW, or up to 50kW for micro-CHP³.

The capacity limits are the key structural fact. All technology types have a maximum permitted capacity of 5MW, with the exception of micro-CHP installations, which are capped at 50kW¹⁰. This was confirmed again in the Year 3 annual report: installations have a maximum permitted capacity of 5MW, with micro-CHP installations excepted¹¹. For a domestic generator, these limits are generous. A typical home wind turbine or micro hydro scheme sits far below 5MW, so capacity is rarely the barrier for a household; the practical constraints are certification, metering and grid connection, not size.

The scheme's design followed the closure of the Feed-in Tariff. Ofgem's guidance for generators notes that the SEG requires licensed electricity suppliers to offer export tariffs to anaerobic digestion, hydro, onshore wind and solar PV installations, with generators holding a total installed capacity up to 5MW¹². The licence guidance for suppliers sets out the same scope¹³. When the scheme was being designed, the government proposed that remuneration would be available to all the technologies then eligible for the FIT scheme, up to 5MW in capacity¹⁴, and the consultation confirmed it would be available to technologies up to a capacity of 5MW¹⁵.

For a household weighing up microgeneration options, the practical point is that wind, hydro and micro-CHP all sit inside the SEG's scope alongside solar. A rural home with a good wind site or a watercourse with usable head and flow can export under exactly the same framework as a house with roof panels. Micro-CHP is the one technology with a tighter cap, at 50kW, which still comfortably covers domestic-scale units.

Tariff rates: suppliers choose, from a penny to 25p

There is no single SEG rate. Suppliers can set their own SEG tariff rates, provided they offer more than £0 per unit of metered exported power¹⁶. SEG Licensees determine the rate, the contract length and other terms that SEG Generators will receive, but the tariff rate must always be above zero³. All SEG tariffs must pay a rate greater than 0p/kWh at all times⁴.

The spread between the best and worst tariffs is wide. As of June 2026, SEG payments can reach up to 25 pence per kWh, which is comparable to the unit rate of imported electricity⁵. At the other end, rates set by individual suppliers can be as low as 0.01p/kWh, with some tariffs reported as high as 20 to 40p/kWh¹⁷. Between those extremes sit the tariffs most generators actually sign. The average tariff rate offered during SEG Year 5 was 10.8p per kWh, a further 30% increase from SEG Year 4⁴. Independent advice puts the average export rate at around 12p/kWh¹⁸, and a government call for evidence used an assumed tariff of 12.5p/kWh for illustrative revenue estimates¹⁹.

Named tariffs illustrate the range. One SEG tariff on the market pays a fixed 1.0p per kWh, while the Utilita Smart Export Guarantee pays a fixed 3.0p per kWh with no fixed end date and payments every three months²⁰. Both are a long way below the average, which is why comparing tariffs before signing matters more than any other single decision in the process.

Two cautions apply. First, SEG rates are often less than what you pay for electricity, so it is worth shopping around²¹. A unit exported at 3p is worth far less than a unit you avoid importing at the retail rate, which strengthens the case for using your own generation where you can. Second, the government's expectation when the scheme was created was that tariff levels set by suppliers would reflect the value of the exported electricity, with no additional costs expected to be passed on to other consumers⁸. Whether any given tariff reflects that value is a matter for the supplier's commercial judgement, not a rule a household can rely on.

Metered export, not a deemed percentage: why the smart meter matters

The SEG pays only for electricity that is actually measured leaving your property. In order to qualify, generators must have a smart meter to monitor exports⁵. Ofgem's rules are more specific: generators must be fitted with an export or smart meter capable of taking measurements at half-hourly intervals², and the consultation that shaped the scheme stated plainly that exported power must be metered, with a meter capable of reporting exports on a half hourly basis¹⁵. Energy Saving Trust advises that you need a registered smart meter that records your exported electricity, even if you are not signing up to a smart tariff⁶.

This is a deliberate break with the old Feed-in Tariff approach. Under the FIT scheme, many generators were paid on a deemed export basis: a percentage of the generation meter reading assumed to have been exported, set annually by government. For FIT scheme year 13, the deemed percentage was 75% for hydro and 50% for all other technologies²². A household with a hydro scheme under FIT could therefore be paid for export it never measured, on the assumption that three-quarters of its generation flowed to the grid.

The SEG removes that assumption. Payments are exclusively an export tariff, based solely on how much electricity you export back to the grid, as recorded by your smart meter¹⁷. If your home consumes the electricity as it is generated, nothing is exported and nothing is paid, whether or not the turbine is spinning or the water is flowing. The government's position is that SMETS-compliant smart meters are compatible with microgeneration and enable measurement of export on a half-hourly basis¹⁴.

The practical consequences for a wind, hydro or CHP household are significant:

• Self-consumption is invisible to the SEG. Electricity used on site earns nothing under the scheme, only electricity that crosses the meter.
• Half-hourly metering enables time-varying tariffs. Because the meter records when exports happen, suppliers can offer rates that differ by time of day, which suits intermittent generation such as wind.
• A working meter is a condition of payment. Without a registered smart or export meter, the export cannot be recorded, settled or paid.
• Generation that is not measured cannot be claimed. The deemed percentages of the FIT era do not carry over.

For a generator connected under G98 or G99, the export meter is part of the same settlement chain that makes the grid connection work. The dependence to note is that the household relies on the metering system and the supplier's settlement process to be paid correctly, not just on its own equipment.

Approved installer schemes: MCS and Flexi-Orb

Certification is the gatekeeper for SEG eligibility. The technology and installer must be certified under the Microgeneration Certification Scheme (MCS) or an equivalent scheme, and suppliers may ask for an MCS certificate when you apply⁶. For solar PV, wind and micro-CHP installations up to 50kW, this will mean presenting an MCS certificate or equivalent⁴. MCS's own consumer guidance states the conditions plainly: your system must have been installed by an MCS certified installer using certified products⁹.

MCS is the most widely accepted certification, but it is not the only route. The equivalent scheme offered by the Flexible Energy Oversight Registration Body (Flexi-orb) is also accepted by most SEG rate providers²¹. A household choosing an installer for a wind turbine or hydro scheme should therefore check not only that the installer is accredited, but that the accreditation scheme is one the chosen SEG Licensee will accept. More detail on the certification process for these technologies is on the MCS certification for wind and hydro page.

The risk of skipping certification is stated in official terms: having your system installed by a non-accredited installer could mean that you are not eligible to apply for the Smart Export Guarantee²³. This is not a technicality that can be fixed after the fact. The certificate relates to the installation as it was carried out, so an uncertified installation may be permanently excluded from the scheme regardless of how well it performs.

One registration rule catches out generators moving from the old scheme. In order to register for the SEG, you must first opt out of FIT export payments for the installation by contacting your FIT Licensee²⁴. Most accredited FIT installations will be eligible for the SEG, provided they have a smart or export meter installed²⁴. The certification and registration steps are, in effect, the household's proof to a supplier that the generator is real, safe and measurable, and they are the point at which a poorly chosen installer can cost years of export income.

Battery storage and your export payments

A battery does not make a generator ineligible for the SEG. The scheme pays exclusively an export tariff, based solely on how much electricity you export back to the grid, as recorded by your smart meter¹⁷. Eligibility turns on the technology, the capacity, the certification and the metering, not on whether the household stores electricity on site.

What a battery changes is the volume and timing of what is exported. Electricity generated by a wind turbine or hydro scheme and stored in a battery for use in the evening is electricity that never crosses the export meter, so it earns no SEG payment. For a household whose import tariff costs more than its export tariff, that trade can still make financial sense, since a stored unit used on site displaces a unit bought at the retail rate, which is generally worth more than the export rate²¹. But it means the SEG payment falls as self-consumption rises, and the two benefits should not be counted twice.

The SEG itself was introduced in 2020 to replace the feed-in tariff¹⁸, and its export-only design is what creates this trade-off. Under the old deemed-export approach, a FIT generator was paid an assumed percentage of generation regardless of what happened on site. Under the SEG, storage shifts exports rather than creating them. A household with a battery and a wind turbine should therefore expect:

• Lower export volumes, because the battery absorbs generation that would otherwise flow to the grid.
• More valuable self-consumption, because stored units displace imports at the retail rate.
• Time-shifted exports, where the battery is full or the household chooses to export, which can matter if the tariff pays different rates at different times.
• No change to eligibility, provided the metering and certification conditions are still met.

The independence picture is double-edged. A battery genuinely reduces a household's dependence on the grid and on a supplier for the units it stores and uses. But the SEG income that partly funds a generation project depends on exports, so a household that stores everything it generates will see that income fall towards zero. The balance between the two is a household decision about its own usage, not something the scheme decides for it.

Exporting in Northern Ireland: a separate system

The SEG does not run in Northern Ireland. Energy Saving Trust states it bluntly: SEG tariffs are not available in Northern Ireland⁶. The scheme's territorial extent is Great Britain, and installations must be located there to qualify³. A household in Northern Ireland with a wind turbine or micro-CHP unit cannot sign up to a SEG Licensee, and the tariff comparison that applies in Britain does not apply there.

Northern Ireland has its own arrangements, administered separately. The Northern Ireland Sustainable Energy Programme (NISEP) is an energy efficiency programme for domestic and non-domestic customers²⁵, and the Utility Regulator publishes the list of schemes under it, as it did for 2023/2024²⁶. Export payments for small generators in Northern Ireland sit under these separate arrangements rather than under the GB framework, and the detail is covered on the Northern Ireland export payments page.

Two practical points matter for anyone generating in Northern Ireland. First, the connection itself: designers of renewable electricity generation technologies are encouraged to engage at an early stage with Northern Ireland Networks (NIE) to confirm that an export connection can be provided²⁷. Confirming that an export route exists before committing to an installation is more important there than in Great Britain, because the payment scheme that follows depends on it. Second, tax treatment has converged: wind turbines were zero rated for VAT UK wide from 1 May 2023, now applicable to Northern Ireland²⁸.

The dependence to state plainly is that a Northern Ireland household exporting electricity depends on a different, smaller set of buyers and a different regulator, and the rates and terms available to it are not the rates discussed in the rest of this page. Anyone generating there should check the current position with the supplier and the Utility Regulator rather than assuming GB figures apply.

Contract terms, exit fees and switching

The SEG is a contract between the generator and the SEG Licensee, and the licensee sets most of the terms. SEG licensees can choose the tariff rate, the contract length and some other relevant terms which they will offer generators as part of the SEG contract⁷. When the scheme was designed, the government proposed exactly this: suppliers would determine the tariff per kWh for remuneration, and the length of the contract¹⁴.

The terms on offer differ between suppliers in ways that matter over a contract's life. The Utilita Smart Export Guarantee, for example, is a fixed tariff with no fixed end date, paying 3.0p per kWh on a three-month payment cycle, and it does not require the household to take an import tariff from Utilita²⁰. Another tariff on the market pays a fixed 1.0p per kWh²⁰. Contract length, payment frequency and whether an import tariff must be held with the same company are all set by the licensee, so the headline rate is only one of several terms to compare.

Switching is possible, and the SEG does not lock a household to its import supplier. Because generators are paid by their chosen SEG Licensee, which need not be the import supplier³, a household can hold its export tariff with one company and its import tariff with another, and can change either. Independent guidance on switching with generation installed notes that households with solar panels can switch energy supplier, and the same logic applies to wind, hydro and CHP generators holding an SEG tariff¹⁷.

One rule governs the boundary with the old scheme and is worth restating here because it bites at contract stage: generators intending to claim SEG payments must not be in receipt of an FIT export tariff for the same generation capacity²⁹. Generators do not have to opt out of FIT generation payments to receive SEG export payments²⁹, so a FIT household keeps its generation income and adds SEG export income, but it must first opt out of FIT export payments by contacting its FIT Licensee³⁰. The history of the closed scheme is on the Feed-in Tariff for wind, hydro and micro-CHP page.

Plans for the Community and Smaller-scale Electricity Export Guarantee Scheme

Beyond the SEG itself, legislation has created a further scheme aimed at community and smaller-scale exporters. The Community and Smaller-scale Electricity Export Guarantee Scheme applies to exporting sites generating low carbon electricity with a capacity below 5MW³¹. Its purpose follows the same principle as the SEG: ensuring small-scale generators are paid for the renewable electricity they export to the national grid⁸.

The registration requirements under this scheme are set out in legislation and are more prescriptive than the SEG's. Exporters must register their site with GEMA, install a smart export meter that meets specifications defined by GEMA, and notify GEMA if their ownership structure meets the definition of a Community or Smaller-scale Energy site³¹. Three obligations, in order:

1. Register the site with GEMA, the authority named in the legislation.
2. Install a smart export meter meeting GEMA's specifications.
3. Notify GEMA where the ownership structure qualifies as a Community or Smaller-scale Energy site.

The direction of travel for small-scale generation policy is visible in the government's consultation on the future for small-scale low-carbon generation, which examined what should follow the SEG framework¹⁵. For a household, the practical significance is that export payment arrangements continue to evolve, and the metering investment a generator makes now, a half-hourly capable smart meter, is the piece of infrastructure that carries across both the current scheme and its planned successor.

For community groups, the relevance is more direct. A community wind or hydro project below 5MW, of the kind described on the community wind and hydro schemes page, falls squarely within the new scheme's stated scope, and the GEMA registration and notification duties are ones a community organisation, rather than an individual household, will need to discharge. The dependence that remains is unchanged: even under a successor scheme, exporters depend on a regulator's specifications, a compliant meter and a buyer for the power, and no scheme yet removes the household or community from that chain.