Record earnings from solar PV in 2023
UK Homes generated Record earnings from solar PV in 2023.
British households generated a record £31 million from rooftop solar panels through Ofgem’s Smart Export Guarantee (SEG) scheme in 2023. The initiative pays households for exporting surplus renewable energy back to the grid, and the earnings reflect a growing interest in renewable energy, spurred by rising electricity costs and a surge in solar installations.
Growth in Solar Energy Adoption
A substantial shift towards renewable energy followed recent electricity price hikes and reduced solar panel installation costs. Households increasingly turned to rooftop solar as a reliable way to save money, especially as the Conservative government eliminated VAT on solar panels in 2022, further reducing initial installation expenses. Demand for solar panels has spiked in recent years, driven by both the need for energy independence and the rising cost of living.
To support this transition, Ed Miliband, the Energy Secretary, has advocated a “rooftop revolution” aimed at tripling the country’s solar capacity. Miliband has said that solar panels represent a “win-win technology,” providing both environmental and financial benefits.
How the SEG Scheme Works
The Smart Export Guarantee (SEG) allows households to sell unused solar energy back to energy suppliers, with energy providers required to offer an export tariff for these contributions. Providers set their own rates, meaning that payouts can vary depending on the chosen tariff. In 2023, the SEG scheme distributed nearly £30.7 million to 283,666 households, a significant jump from the 92,946 participants in 2022.
The SEG is structured to be cost-effective for taxpayers because it’s not subsidised by public funds. Households contribute their excess energy at rates set by energy providers, which allows flexibility in payments based on market dynamics. This approach has led to greater diversity in tariff offerings, with some rates more favorable than others. For example, some providers offer rates as high as 27p per kilowatt-hour, but this typically requires the household to have additional green energy solutions like home batteries or electric vehicles.
On average, households received 13p per kilowatt-hour last year, though more common, straightforward plans provided approximately 5.7p per kilowatt-hour. When compared to the average electricity purchase rate of 24.5p per kilowatt-hour under the energy price cap, it’s a modest payment. However, for households already seeing savings on bills due to solar, the SEG payments are an added benefit.
Solar’s Impact Across the UK
Last year, SEG participants exported 238 gigawatt hours to the grid, which is enough to power nearly 88,200 homes for an entire year. Nearly all SEG participants—99.98%—are using rooftop solar panels, with only a few using alternative renewable sources such as small wind or hydropower installations. Solar installations are especially popular in the South of England, where daylight hours are longer, allowing for more power generation.
Financial Benefits of Solar Installations
For most households, solar panels represent a longer-term investment. Installations typically cost around £5,000 or more, with savings building up over time through reduced energy bills and SEG payments. The Energy Saving Trust estimates that households in London could reach profit on their investment in about 11-12 years, while households in Scotland might take up to 14 years due to lower sunlight levels. Although the payback period might seem lengthy, it’s offset by the immediate reduction in electricity bills and protection against energy price volatility. Plus, solar panels have performance guarantees for 25 years so once the system has paid for itself it will continue to generate profits for at least another decade.
SEG earnings can range based on the size of the installation, usage, and chosen tariff. With an average household earning around £108 annually, larger systems and households with high energy usage tend to see better returns.
Looking Forward
The record earnings from solar PV in 2023 demonstrates solar energy’s potential for financial and environmental impact. As the market continues to expand, more households are likely to consider solar as a viable energy option, not only to reduce their bills but also to contribute to a sustainable energy grid. As long as the government don’t mess things up, the UK is poised for a continued “rooftop revolution,” making solar energy accessible, profitable, and an essential part of Britain’s renewable energy landscape.
If you are considering solar, check out our free solar energy guide, read more about how solar PV works, and differences between Polycrystalline vs monocrystalline and other types of solar photovoltaics.
If you are thinking of getting solar photovoltaics installed be sure to use a Mircogeneration Certification Scheme approved installer.
