United Kingdom: the Smart Export Guarantee replaces FIT, and biogas plants face an audit

The Smart Export Guarantee (SEG) is a mechanism in force in the United Kingdom (England, Scotland and Wales, excluding Northern Ireland) which from 1 January 2020 replaced the feed-in tariff (FIT) system. For generators of energy from biogas this means a move from a rate set by the state to settlement with an energy supplier for electricity fed into the grid.

What has changed

FIT was a system in which the generator received a rate for every kilowatt-hour produced, set administratively and applying for many years. For new installations the system was closed at the end of March 2019 (with limited exceptions and transitional periods). Its successor is SEG: large energy suppliers must offer export tariffs, while smaller ones may do so voluntarily. SEG and FIT payments cannot be received simultaneously for the same energy.

From the point of view of a small biogas plant this is a significant difference. Revenue no longer results from a table of rates published by the regulator but from the offer of a specific supplier. It therefore pays to compare offers and negotiate, and to know how much energy the installation actually exports and how much it uses on site.

Biogas plants: sustainability audit from 1 MW

Ofgem has published guidance for biogas (anaerobic digestion, AD) generators participating in SEG. Installations with a total installed capacity of 1 MW and above must submit an independent report from an audit of the sustainability criteria every year. This is the equivalent of requirements known from other biomass support schemes.

Greenhouse gas emission thresholds for biogas are tightened over time:

What this means for investors

The British market shows a trend visible in many countries: a move away from fixed rates towards market settlement and additional sustainability requirements. In Poland we write about similar mechanisms (auctions, guaranteed tariffs) in other posts in the law category. When assessing the profitability of an installation in the United Kingdom, you need to calculate separately the revenue from energy exports, historical support (if the installation already has it) and the costs of audits.

In the SEG model there is no single national rate in pence per kWh, and FIT rates do not apply to new installations.