The question of how to sell excess solar power back to the grid comes up a lot when we install or replace solar infrastructure at our client sites. Whether we are dealing with a school, office, warehouse sports facility, solar is an amazing way of generating electricity to reduce bills and improve sustainability credentials.
But when that solar generation exceeds on-site demand, what happens to the surplus? Or more to the point, what can a school or business to maximise its return?
The answer could be: sell the excess power back to the grid.
In the UK, businesses can sell excess electricity back to the grid through a process called “export”, often under a Power Purchase Agreement (PPA) or via participation in the Smart Export Guarantee (SEG) scheme. Understanding how these work involves looking at metering, licensing, contracts and settlement arrangements.
Eligibility and infrastructure requirements
To export electricity legally and safely, the business needs grid connection approval from the Distribution Network Operator (DNO). For most commercial-scale installations, this happens under G99 or G100 connection standards, depending on the system’s size and export capacity. A formal grid export limitation system might also be required if the local network can’t handle full export capacity.
Next, the solar PV system must be registered with Ofgem and comply with MCS (Microgeneration Certification Scheme) standards or equivalent if the business is seeking access to government-backed export schemes.
Proper metering is critical. The business needs an export-capable smart meter or a half-hourly meter, which records how much electricity is sent to the grid. These meters must be approved under MID (Measuring Instruments Directive) for accuracy and must be able to communicate with the energy supplier or the settlement system.
The Smart Export Guarantee (SEG)
The SEG, launched in January 2020, replaced the Feed-in Tariff (FiT) scheme. It mandates that all licensed electricity suppliers with more than 150,000 customers must offer at least one export tariff to eligible generators, including businesses.
SEG rates are set by suppliers and vary widely. Typically these are between 1p and 15p per kWh, depending on the supplier and market conditions. The SEG is a route for smaller commercial systems, especially those generating less than 1 MW, to receive payment for exported electricity without needing to enter complex trading arrangements.
To qualify for SEG payments, businesses must:
- Use an SEG-licensed supplier
- Install export-capable metering
- Ensure generation comes from eligible technologies (solar PV is included)
- Register the installation and provide necessary declarations
It’s worth noting that SEG only pays for exported electricity. Any generation consumed on-site is not covered.
Power Purchase Agreements (PPAs)
For larger systems, especially those exporting consistently significant volumes, PPAs offer more flexibility and potentially better rates. A PPA is a contract between the generator (the business) and an energy offtaker (usually a licensed supplier or aggregator), setting the terms for buying exported electricity.
PPAs typically run for several years and can include fixed or variable pricing. Larger companies often use PPAs to secure predictable revenue from their generation assets, while offtakers gain access to renewable energy without owning the infrastructure.
Some energy suppliers offer aggregated export PPAs, where multiple small generators are bundled together, improving access to better pricing and reducing complexity for the business.
Licensing and market participation
Businesses exporting more than 5 MW of power or engaging in complex trading (e.g. selling on the balancing market) may require a generation licence from Ofgem. However, most small and medium-sized installations can operate under licence exemptions.
Participation in wholesale energy markets or grid-balancing schemes (like National Grid’s Balancing Mechanism) is possible, but demands technical capability, forecasting accuracy and commercial sophistication. Aggregators can support this, taking on the role of intermediary between small generators and the market.
Revenue streams and optimisation
Selling excess electricity isn’t just about offloading spare kWh. Smart export strategies can maximise value through:
- Time-of-export optimisation: scheduling loads or battery storage to export during peak-rate periods
- Grid services participation: exporting during times of high demand or low supply, providing services like frequency response
- Corporate PPAs: selling directly to another business, often with green energy certification
These approaches require investment in data, controls, and commercial expertise, but can significantly increase returns beyond basic SEG tariffs.
How to sell your excess solar power back to the grid in the UK is technically possible. Whether through SEG for smaller systems or PPAs for larger ones, businesses have multiple paths to monetise surplus generation. The key is choosing the right route for your scale, goals and grid constraints and ensuring your system infrastructure is maintained and up to standard.
Common Q&As
Can businesses store excess solar energy instead of exporting it?
Yes, businesses can install battery storage systems to retain surplus energy for later use, reducing reliance on the grid during peak times and potentially lowering electricity costs further.
What tax implications are there for selling solar power?
Revenue from exported electricity may be subject to corporation tax, depending on the scale and structure of the business. It’s advisable to consult an accountant for specific obligations.
Can a business use solar power during a grid outage?
Not usually. Most commercial solar systems shut down during a grid failure for safety reasons unless they are paired with battery storage and an off-grid inverter setup.
Are there grants available for installing solar panels on business premises?
While most direct grants have phased out, capital allowances and certain local authority schemes may still support solar installation. Some regions offer green business funding incentives.
Does installing solar panels affect business insurance?
It can. Insurers may require updates to policies to reflect the added value and potential risks of solar infrastructure, such as fire, weather damage, or liability from exports.
