Solar panels can reduce the amount of electricity you need to buy from the grid, but what happens when your panels generate more electricity than you're using?

That's where battery storage and the Smart Export Guarantee (SEG) become particularly useful.

A well-designed solar and battery system can allow you to generate electricity during daylight hours, store some of the electricity you don't immediately need and potentially receive payments for eligible electricity exported back to the grid.

But getting the best from the system starts with understanding how the three elements work together.

How Do Solar Panels and Battery Storage Work Together?

Solar photovoltaic (PV) panels generate electricity from daylight.

When your solar panels are generating electricity, that power can first be used by appliances and electrical systems operating within your property.

If your panels generate more electricity than you're using at that moment, the surplus electricity can potentially be:

stored in a battery for later use, or

exported to the electricity grid.

A battery allows you to keep some of the electricity generated during the day and use it later — for example, in the evening when your solar panels are producing little or no electricity.

Without battery storage, surplus solar electricity that isn't being used at the property will generally be exported to the grid.

What Is the Smart Export Guarantee?

The Smart Export Guarantee (SEG) is a government-backed arrangement that requires certain licensed electricity suppliers to offer eligible small-scale generators payment for low-carbon electricity exported to the grid.

Solar PV is one of the eligible technologies.

Rather than allowing surplus electricity to be exported without payment, an eligible property can apply for an SEG tariff from a participating electricity supplier.

The amount you're paid depends on the tariff offered by your chosen SEG supplier.

Importantly, there isn't one national SEG rate.

Electricity suppliers determine their own rates, contract lengths and other tariff terms, although an SEG tariff must pay more than zero.

That makes comparing export tariffs an important part of assessing the financial performance of a solar installation.

Do You Need a Battery to Get Smart Export Guarantee Payments?

No.

You don't need battery storage simply to receive SEG payments from an eligible solar PV installation.

Solar panels can generate electricity for your property, with eligible surplus electricity exported to the grid.

A battery serves a different purpose.

Instead of immediately exporting all surplus solar generation, a battery can allow you to store electricity for use later.

This can potentially reduce the amount of electricity you need to purchase from your supplier when your solar panels aren't producing enough to meet your demand.

Can Battery Storage Work With the Smart Export Guarantee?

Yes, battery storage can be used alongside installations participating in the SEG, but the details matter.

Ofgem provides specific guidance covering the co-location of electricity storage with SEG installations. Individual electricity suppliers can also have different tariff requirements.

Some export tariffs may also be designed specifically around solar and battery systems.

This means you should check the conditions of an export tariff rather than assuming every solar-and-battery configuration will be treated in exactly the same way.

Is It Better to Store Solar Electricity or Export It?

This depends on your circumstances.

Imagine your solar panels are producing more electricity than your building needs at midday.

You could export that surplus electricity and receive the applicable export payment.

Alternatively, if you have battery storage, you may be able to store some of that electricity and use it later rather than buying electricity from the grid.

Which option offers better value can depend on your:

• electricity import tariff;

• SEG or other export tariff;

• battery capacity;

• solar generation;

• electricity consumption pattern; and

• time-of-use tariff, where applicable.

Because import and export tariffs can change, it's better to model these figures using your actual tariff rather than relying on a generic calculation.

What Size Solar Panel System Do You Need?

There isn't a single solar system size that's right for every two-, three- or four-bedroom property.

A proper assessment should consider factors including:

Annual electricity consumption — how many kilowatt-hours (kWh) you use over a year.

When you use electricity — a property occupied throughout the day may use solar generation differently from one that's empty during working hours.

Available roof space — the usable roof area can limit the number of panels that can be installed.

Roof orientation and shading — these can influence expected solar generation.

Future electricity demand — installing an electric vehicle charger or heat pump could change how much electricity the property uses.

The aim shouldn't necessarily be to install the maximum number of panels possible.

The objective is to design a system appropriate for the property, its electricity demand and the owner's objectives.

What Size Battery Do You Need With Solar Panels?

Battery sizing should also be based on how the property actually uses and generates electricity.

A larger battery isn't automatically better.

If the battery is significantly larger than the amount of surplus electricity regularly available to charge it, some of that capacity may be underused.

A battery that's too small, however, may not capture as much surplus generation as you would like.

Useful information for sizing a battery includes your:

annual electricity consumption;

daytime and evening electricity usage;

expected solar generation;

existing or planned solar PV capacity;

electricity tariff; and

objectives for the system.

For example, someone primarily interested in increasing their use of self-generated solar electricity may need a different battery strategy from someone using a time-of-use tariff.

Can Solar Panels and Batteries Reduce Electricity Bills?

They can reduce the amount of electricity that needs to be purchased from the grid, but the financial outcome varies significantly between properties.

Solar panels can allow you to generate some of your own electricity.

Battery storage can potentially increase the proportion of that electricity you use yourself.

And an SEG tariff can provide payment for eligible electricity that you export.

Together, these can change both how much electricity you purchase and what happens to the electricity you don't use.

However, expected savings should be assessed against installation cost, system performance, tariffs, consumption and other property-specific factors.

Who Can Apply for the Smart Export Guarantee?

SEG isn't limited to one particular type of property owner.

Eligible small-scale low-carbon generators in Great Britain can potentially participate, provided the installation and metering meet the relevant requirements.

For solar PV and most other eligible technologies, the maximum total installed capacity under SEG is 5 MW.

You also don't necessarily have to use the company that supplies your electricity for your SEG payments. Ofgem states that eligible generators can apply to a different SEG licensee.

That gives property owners an opportunity to compare available export tariffs rather than automatically accepting an offer from their existing electricity supplier.

Planning Solar Panels and Battery Storage?

Before choosing the number of solar panels or the size of a battery, start with the building's actual energy use.

Look at how much electricity you consume, when you consume it, the property's solar potential and what you're trying to achieve.

For some properties, the priority may be reducing grid electricity consumption.

For others, it may be storing more solar generation, supporting future heat-pump or EV demand, or making better use of export tariffs.

The right solution begins with the building and its energy profile, not simply with the equipment.

Get Help Planning Your Energy Upgrade

The Implementation Lab helps homeowners, community organisations and businesses understand their energy-upgrade options and move from initial assessment through to implementation.

If you're considering solar panels, battery storage, a heat pump or a combination of technologies, our free 15-minute review can help you identify the next steps.

Book your free 15-minute review with The Implementation Lab.

Email: support@theimplementationlab.co.uk
Website: The Implementation Lab 

Sources & Further Reading

 Ofgem — Smart Export Guarantee (SEG)
Official information explaining the Smart Export Guarantee, eligible technologies and how the scheme operates.
Smart Export Guarantee – Ofgem

Ofgem — Smart Export Guarantee for Generators
Official guidance covering eligibility, applications, export payments and choosing an SEG supplier.
Smart Export Guarantee for Generators – Ofgem