For many businesses with renewable energy generation on site, exporting surplus electricity to the grid can provide a valuable additional income stream. But before payments can be made, two key things that need to be in place: a valid export contract with a supplier, and a meter operator to accurately measure how much electricity is being exported.

Why export contracts matter

When a renewable system generates more electricity than is being used on site, the surplus power can be sent to the grid. However, payments are not automatic. A supplier must agree to buy the exported power, and the exported volume must be measured or correctly accounted for.

Historically, many renewable systems accredited under the Feed-in Tariff (FiT) scheme were able to receive “deemed” export payments. This meant payments were based on an assumed percentage of generated electricity being exported, often without the need for a dedicated export meter.

That system was discontinued and was replaced with two main routes for export payments: a Smart Export Guarantee (SEG) tariff or a Power Purchase Agreement (PPA). The right route depends largely on the size of the system, the type of connection and the expected level of export.

Smart Export Guarantee tariffs

Smart Export Guarantee tariffs were introduced for smaller-scale renewable generators in 2020. They are generally most suitable for smaller scale generators where the installation is below 69kVA.

To access a SEG tariff, the site will usually need a SMET2 smart meter capable of recording exported electricity. In many cases, the supplier that holds the import electricity contract may be able to arrange a suitable smart meter upgrade.

SEG can be a straightforward route for smaller generators, but there are some points to consider. Supplier rates can vary significantly, and onboarding times can be slow. It is important to check not only the headline export rate, but also the practical requirements for metering, eligibility and switching.

Power Purchase Agreements

Power Purchase Agreements, or PPAs, are generally more suitable for larger renewable installations or sites with higher levels of export. A PPA sets out the commercial terms under which a supplier buys exported electricity from the generator.

PPAs require half-hourly export metering and can offer more structured and flexible options than SEG tariffs, including fixed prices, market-linked prices or a blend of both. For larger sites, this can provide a more tailored route to market and may achieve stronger export value.

However, PPAs can involve more setup work. Export metering, data collection, supplier onboarding and contract negotiation all need to be considered before payments can begin.

What affects the type of export contract available?

Not every site will be offered the same export contract or rate. Suppliers will usually consider several factors before making an offer.

The first is the type of renewable technology installed. Different technologies generate electricity in different patterns. For example, solar generation is concentrated during daylight hours, while other technologies may export more consistently. The timing of export can affect the value of the electricity.

The second is the size of the system and expected annual generation. Larger generators may have access to more contract options, including fixed, market-linked or mixed pricing structures.

The third is on-site electricity demand. If most of the generated electricity is used by the business on site, there may be limited surplus available for export. This can affect the type of contract suppliers will offer.

Why metering needs to be considered early

Metering is one of the most important parts of setting up an export arrangement. Most export supplies are linked to an import supply, and the characteristics of that import supply can influence what type of export metering can be installed.

For smaller non-half-hourly connections, a smart meter may be enough to record export for a SEG tariff. For larger or half-hourly connections, separate export metering may be required. Some types of metering can have long lead times, so planning ahead is recommended well in advance of arranging an export contract.

Export metering and data collection can also introduce annual costs so these must be carefully measured against the anticipated export income to ensure there is a genuine net benefit.

Common challenges when setting up export contracts include supplier onboarding delays, particularly for first-time SEG arrangements, as well as issues caused by missing information, unsuitable metering or uncertainty around the import supply.

Customers also need to choose the right contract type for their generation profile, as smaller generators may not need the complexity of a PPA, while larger exporters may benefit from more structured options. As export rates can change with the market, the best arrangement will depend on expected export volumes, risk appetite and whether the customer prioritises price stability or market-linked opportunity.

How NFU Energy can help

NFU Energy can support customers throughout the export contract process, from reviewing meter requirements and arranging export metering contracts, to sourcing suitable PPAs or providing guidance on SEG applications.

Our team looks at each opportunity individually considering expected export volumes, current tariff options, market movements and associated costs before making a recommendation.

The goal is always to help customers achieve a genuine financial benefit from exporting electricity, while ensuring the contract and metering arrangements are suitable.

To learn more, get in touch with our team at [email protected] or call 024 7669 6512.