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Solar batteries and SEG: does adding a battery affect your export payments?
If you're thinking about adding a battery to your solar panels, you've probably heard two things. First, that a battery helps you use more of the electricity you generate. Second, that you'll earn less from the Smart Export Guarantee (SEG).
Both are true. But that doesn't mean a battery is a bad idea. It means the maths is a bit different to what most people expect.
This article explains exactly what changes when you add a battery, how to work out whether you're better off, and what to look out for when making the decision.
Want to know what a solar and battery system would save your home specifically? Get a free estimate from OVO and we'll give you a personalised figure.
How SEG works without a battery
When your solar panels generate more electricity than your home is using at that moment, the surplus goes to the grid. Under the Smart Export Guarantee, your energy supplier pays you for every unit you export.
Without a battery, most homes export roughly 30 to 40% of what their solar panels generate. The exact amount depends on how much electricity you use during the day and how big your solar system is.
At OVO's current fixed rate of 12p per unit, a typical 4kW system exporting around 1,500 units a year would earn roughly £180 in annual SEG income.
What changes when you add a battery
A battery stores the surplus electricity that would otherwise go to the grid. Your home then draws on that stored power in the evening, overnight, or on cloudy days instead of buying it from the grid.
This is the key shift: instead of exporting surplus and earning 12p per unit, you're using it yourself and avoiding paying around 24p per unit for grid electricity. Self consuming your solar is worth roughly twice as much per unit as exporting it.
| Without battery | With battery | |
|---|---|---|
| Typical self consumption | 30 to 40% | 70 to 80% |
| Typical export | 60 to 70% | 20 to 30% |
| Annual SEG income (4kW system) | £150 to £250 | £40 to £100 |
| Annual bill saving from self consumption | £400 to £600 | £700 to £900 |
| Combined annual benefit | £550 to £850 | £740 to £1,000 |
The table above uses approximate figures based on a 4kW solar system, OVO's 12p SEG rate, and an average electricity price of 24p per unit. Your actual figures will depend on your system size, usage patterns, and tariff.
So does a battery reduce your SEG income?
Yes, it does. There's no getting around that. You export less, so you earn less from SEG.
But the money you save by not buying grid electricity more than makes up for the drop in SEG income for most households. The overall financial benefit is typically higher with a battery than without one.
The exception is if you're on a particularly high SEG rate and your battery isn't well matched to your usage. If you don't use much electricity in the evenings, a battery won't have much to discharge, and the savings will be smaller.
Fixed vs variable SEG tariffs
Not all SEG tariffs work the same way. On a fixed rate tariff like OVO's 12p rate, you earn the same per unit regardless of when you export. With a battery, you simply export less, so your SEG income falls and the saving comes from self consumption instead.
On a variable rate tariff, you earn more for electricity exported at peak times, typically between 4pm and 7pm in winter. A battery lets you store daytime solar and release it during those windows when the rate is higher. Done well, this can actually increase your SEG income despite exporting less overall. Variable tariffs are more complex and usually require you to import and export with the same supplier, but they suit households willing to optimise their usage.
Is a solar battery worth it if you're on SEG?
For most households, yes. The reduction in SEG income is usually outweighed by the increase in bill savings from self consumption. But it depends on a few things.
A battery is likely to be worth it if:
• You use a lot of electricity in the evening or overnight
• Your electricity import rate is significantly higher than your SEG export rate
• You want to reduce your reliance on the grid
• You're willing to consider a variable tariff to maximise peak export earnings
A battery may be less worthwhile if:
• Most of your electricity use happens during the day while your panels are generating
• Your SEG rate is very high and your evening usage is low
• The upfront cost of the battery means the payback period is too long for your plans
The honest answer is that it depends on your home, your habits, and your tariff. The best way to find out is to get a proper assessment that looks at your actual usage data.
What about the battery cost itself?
Adding a battery typically costs between £2,500 and £6,000 depending on capacity and brand. Battery storage has been zero rated for VAT since February 2024. Payback periods are typically seven to twelve years when you factor in the SEG reduction alongside the increased bill savings. That's longer than solar panels alone, but worth factoring into your overall decision rather than looking at SEG income in isolation.
The bigger picture
Solar, battery and SEG aren't separate decisions. They work together as a system. Without a battery you earn more from SEG but save less on bills. With a battery you earn less from SEG but save significantly more on bills. In most cases the combined package delivers a better overall return. If you already have solar and are thinking about adding a battery, it's also worth reviewing your SEG tariff at the same time — a variable tariff could offset some of the export income you'd lose.
SEG Summary
| Question | Short answer |
|---|---|
| Does a battery reduce SEG income? | Yes. You export less, so you earn less from SEG. |
| Does a battery save more on bills? | Yes. Self consumption saves roughly twice as much per unit as exporting. |
| Is the overall benefit higher with a battery? | Usually yes, for most households. |
| Can a variable tariff offset the SEG reduction? | Yes, if you can export at peak times using stored solar. |
| Is battery storage VAT free? | Yes. 0% VAT applies to battery storage since February 2024. |
Frequently asked questions
Does adding a battery void my SEG contract?
No. Adding a battery does not affect your SEG contract or registration. You will simply export less electricity, which means lower SEG income, but your tariff and registration remain in place.
Can I switch SEG tariffs after adding a battery?
Yes. You can switch your SEG tariff at any time. If you are adding a battery, it is worth reviewing whether a variable rate tariff would suit you better than a fixed rate, as you can time exports to coincide with higher rate windows.
Does a battery affect my solar panel warranty?
No, provided the battery is installed by a qualified engineer and is compatible with your existing system. OVO will confirm compatibility during the survey.
What is the best battery size for maximising SEG income?
If maximising SEG income is your goal, a smaller battery that fills up quickly and then exports the remainder may suit you better than a large battery that retains all surplus. However for most households, maximising self consumption delivers better overall savings than maximising SEG income. OVO will recommend the right size for your usage pattern.
Is a solar battery worth it if I am on a fixed SEG tariff?
For most households, yes. The bill savings from increased self consumption typically outweigh the reduction in SEG income, even on a fixed rate tariff. The exception is households with very low evening electricity usage.
Get a free solar and battery quote from OVO
Every home is different, so the best way to understand what a solar and battery system would actually save you is to talk to us directly. OVO's team will take a look at your home and give you a straight answer.