Net Metering vs SEG: The UK System

Net metering (NOT available in the UK): - Export 1 kWh during the day → credit 1 kWh on your bill - Import 1 kWh at night → use your credit (no charge) - The grid acts as a free battery — store daytime solar for nighttime use - You only pay for NET consumption (import minus export) - If you export more than you import: you may receive nothing or a small payment for the surplus

Smart Export Guarantee (UK system): - Export 1 kWh during the day → earn 4–15p - Import 1 kWh at night → pay 24.5p (full grid rate) - The grid does NOT act as a battery — you pay full price for every imported kWh - Export income and import cost are completely separate - Self-consumption saves 24.5p/kWh; export earns only 4–15p

Why this matters: Under net metering, exporting and self-consuming have the same value (both worth 1 kWh against your bill). Under SEG, self-consumption is worth 2–6x more than exporting. This is why batteries, appliance shifting, and solar diverters are so important in the UK — they increase self-consumption.

Source: Ofgem SEG; international net metering comparison.

4kW system, 4,000 kWh/year, 50% self-consumption:

| Scenario | Self-Consumed | Exported | Import Cost | Export Income | Net Annual Cost | |----------|-------------|---------|-------------|-------------|--------------------| | No solar | 0 | 0 | £980 (4,000 kWh) | £0 | £980 | | Solar + Net Metering | 2,000 kWh | 2,000 kWh | £0 (netted out) | £0 | £0 | | Solar + SEG (4.5p) | 2,000 kWh | 2,000 kWh | £490 (2,000 kWh) | £90 | £400 | | Solar + SEG + Battery | 3,200 kWh | 800 kWh | £196 (800 kWh) | £36 | £160 |

If the UK had net metering: Your bill would be near £0 (exports fully offset imports). Under SEG without battery: Your bill is £400 (you pay 24.5p for imports, earn 4.5p for exports). Under SEG with battery: Your bill drops to £160 (battery captures surplus for evening self-use).

The £400 gap between net metering and SEG is the reason batteries are important in the UK. A battery partially bridges this gap by converting low-value exports into high-value self-consumption.

Source: Financial modelling; international policy comparison.

The combination of battery + Octopus Flux comes closest to net metering value: - Battery stores surplus (like net metering storing on the grid) - Flux rewards peak export at 24p (close to the 24.5p self-consumption value) - Flux charges overnight at 10p (cheap refill)

This is the closest the UK system gets to net metering economics without actual policy change.

Source: Tariff optimisation analysis.

Unlikely in the near term. Here is why:

- The UK electricity system is designed around time-of-use pricing (grid costs vary by time of day) - Net metering treats all kWh as equal, regardless of when they are produced — this does not reflect grid costs - Energy suppliers would lose revenue if exports offset imports 1:1 - The trend is toward smarter, time-differentiated tariffs (like Flux) rather than flat net metering - The government has chosen the SEG model deliberately

What may improve: - SEG rates may increase as competition between suppliers grows - Time-of-use export tariffs (like Flux) may become more generous - Battery prices will continue to fall, making self-consumption more affordable - Grid services (VPPs) will provide additional income streams

The honest assessment: The UK system is less generous than net metering but is evolving toward smarter value mechanisms. Batteries and smart tariffs are the UK homeowner's best tools.

Source: UK energy policy direction; Ofgem strategic framework.