There are numerous government grants for solar panels in the UK, including the:
- Energy Company Obligation Scheme
- Home Upgrade Grant
- Home Energy Scotland Grant and Loan
- and Public Sector Decarbonisation Scheme.
These grants are available to UK residents, with some being specific to certain regions. Grants help drive UK residents towards renewable energy and the government’s Net Zero policy.
This guide will explore the available solar panel grants, what they cover, and who is eligible. We’ll also take a look at other incentives that aid or benefit those with or wanting to install solar panels.
Contents
Energy Company Obligation (ECO4) Scheme
The Energy Company Obligation 4 (ECO4) scheme came into effect in July 2022. This scheme has allocated £4 billion, provided by medium and large energy suppliers, to combat fuel poverty, improve household energy efficiency, and reduce carbon emissions.
If you meet certain eligibility criteria, you could receive free solar panels, including installation. In some cases, you may be required to make a co-payment towards the installation process.
Who is eligible for this grant?
The ECO4 scheme mainly focuses on providing energy-saving measures and solar power to low-income households. To apply for this grant you need to:
- Earn less than £31,000 a year
- Have a household energy performance certificate (EPC) rating between D and G or live in social housing with an E-G EPC rating.Â
- Live in England, Scotland or Wales.
Additionally, you need to receive one of the following benefits:
- Child Benefit (as long as the annual income meets the criteria)
- Child Tax Credits
- Housing Benefit
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Income Support
- Pension Credit
- Universal Credit
- Working Tax Credit
If you don’t receive these government benefits but have an annual income under £31,000, you can still qualify for the ECO4 scheme.
The Local Authority FLEX & Delivery Scheme allows councils in specific regions to determine eligibility regardless of whether or not they receive benefits. In some cases, the council may deem a household eligible even if their income is above £31,000.
How much money could I save?
This grant could cover the entire upfront cost of solar panels and installation, provided it supplies power to an electric heating system. Installing a solar panel system can reduce your energy bills by an average of £290 to £1,600 per year, depending on your household’s prior energy efficiency.
How do I apply for the ECO4 Scheme?
The steps below entail the eligibility and application process for the ECO4 Scheme.
- Complete the eligibility form on the official ECO4 Funding page.
- If you are eligible, the organisation will arrange a free 15-minute inspection of your home’s energy efficiency by a certified surveyor.
- Surveyors will identify the energy-saving measures that can be implemented and, with your approval, book an installation.
It’s worth noting that you can call more than one supplier to find a deal that best suits you. The energy supplier through which you apply for the ECO4 grant does not need to be the same as the one that supplies your home.
The ECO4 scheme expires in March 2026.
Home Upgrade Grant (HUG)
The second phase of the Home Upgrade Grant (HUG2) provides funding for energy-saving and low-carbon home improvements, such as solar panels. This grant is specifically aimed at households that do not rely on gas for heating purposes. An allocation of £700 million has been given towards funding this initiative.
Who is eligible for this grant?
The Home Upgrade Grant is only available to residents in England and eligibility requirements are determined by local councils. However, general requirements apply and applicants must:
- Be located off the gas grid.
- Be a homeowner in England, or have permission from the landlord.
- Have a household income of or under £36,000 (before deductions).
- Have an EPP rating between D and G for owned properties and D or E for rentals.
- Reside within the listed local area authorities.
How much money could I save?
Your local council will determine the exact amount of money you could receive towards your solar panel system. Residents who qualify may receive up to £10,000 to have solar panels installed.
How do I apply for the Home Upgrade Grant?
- Check your eligibility through your local council.
- If eligible, your local council will contact you within 10 business days for more information and arrange a time for a preliminary survey of your home.
- A £500 deposit will be required by the homeowner or landlord prior to the survey. If energy-efficient home improvements are not suited to your house, this amount will be refunded in full.
The Home Upgrade Grant is valid until March 2025.
Home Energy Scotland Grant And Loan
Implemented in June 2023, the Home Energy Scotland Grant and Loan scheme provides grants, interest-free loans or a combination of the two to those who wish to improve the energy efficiency of their homes. This includes the installation of solar panels.
Who is eligible for this grant?
This grant is available to homeowners who reside on their own property in Scotland. If you own property in Scotland but live elsewhere, you cannot benefit from this grant. Landlords, business owners and property developers are also exempt from the Home Energy Scotland Grant. Those eligible must also:
- Reside in a home not reliant on gas as their main heat source.
- Have an EPC rating between D and G.
- Be considered a low-income household, earning less than £36,000 a year.Â
- Live in areas that are considered economically deprived.
How much money could I save?
This programme pays up to 75% of the combined costs of energy-efficient home improvements. Qualifying residents can receive funding up to £6,000 towards solar PV panels.
Those residing in rural or island areas may be eligible to receive added government financing through the Rural Uplift Programme, with a maximum grant payout of £9,000. Shortfalls can be taken as an interest-free loan.
How do I apply for the Home Energy Scotland Grant and Loan?
To begin your application process:
- Contact Home Energy Scotland to find out about your options and whether or not you qualify.
- Complete a home energy check report online. Have your EPC as well as any benefit awards documentation ready.
There is currently no expiration date for this grant as it runs on a first come first served basis.
Public Sector Decarbonisation Scheme (PSDS)
Phase 4 of the Public Sector Decarbonisation Scheme (PSDS) was launched in February 2024 by the Department for Energy Security and Net Zero.
This scheme is aimed at public sector buildings and provides grants for the installation of energy efficiency measures such as commercial solar panels. An amount of £1.17 billion has been allocated for public sector decarbonisation.
Which public sectors are eligible for this grant?
The public sectors that can benefit from this grant include schools, hospitals, and council buildings.
This scheme was previously run on a first come first served basis but has since been reevaluated and amended. PSDS funding now prioritises institutions where the amount of carbon emission reductions will be the highest. In other words, solar panel grants are given to buildings that can benefit the most from energy-efficient upgrades.
Other Incentives That Save Money On Solar Panel Installations
The incentives listed below are not official government grants. However, they are worth taking note of as they could help you save even more money and earn back your ROI faster.
Smart Export Guarantee (SEG)
The Smart Export Guarantee allows those with solar panels to sell their surplus electricity back to the national grid. This is an innovative way to earn money from your solar panel system. The rate paid out varies between energy suppliers. Below is a breakdown of what you could expect to earn per unit of electricity from different suppliers.
| Supplier and tariff | Amount per kWh |
|---|---|
| British Gas (Export and Earn Plus) | 15p |
| E Gas and Electricity (ESEG January 2020.v.1) | 1p |
| E.ON (Net export Exclusive) | 16.5p |
| Good Energy (Solar Savings Exclusive) | 20p |
| Octopus Energy (Intelligent Octopus Flux) | 35p |
| OVO (OVO SEG Tariff) | 20p |
Who is eligible for this incentive?
To qualify for the Smart Export Guarantee, you must:
- Have a solar panel system that meets the SEG requirements.
- Have a smart meter or one that exports readings every 30 minutes.
- Prove that your solar panels and installer are certified through the MSC (Microgeneration Certification Scheme).
- Not receive payments per the Feed-in Tariff Scheme.
0% VAT
Even if you do not qualify for a government grant, you will still have some relief with the zero VAT rate introduced in April 2022. To qualify, your solar panels must be new and cannot be purchased from one company and installed by another. This rate applies to all energy-saving materials and energy-efficient systems and includes:
- Solar panel systems including all wiring and inverters.
- Energy storage systems such as solar batteries.
- Solar panel installations.
This VAT rate is only applicable to residencies and charities, not businesses. The 0% rate is valid until March 31 2027, whereafter it will revert to the reduced rate of 5% VAT.
FAQs
Can businesses apply for solar panel grants?
Apart from the Public Sector Decarbonisation Scheme, the majority of available grants for solar panels are limited to households.
Are solar panel systems tax deductible?
While the 0% VAT on solar panels and energy-efficient material is in place, they are not tax-deductible. However, solar panels are tax deductible for businesses that have paid VAT on their systems and installations.
Can I apply for more than one grant?
Yes, you can apply for more than one grant, but you will not receive the benefits or payouts from all of them. If you do qualify for more than one grant, it is a good idea to do your research to determine which scheme is best for you.
What if I do not qualify for any solar panel grants?
If you do not meet the criteria for grants, there are numerous loans available to those in need of solar panel financial assistance. Some companies have interest-free offers on solar panel loans. The overall loan amounts will differ according to each individual.
Is it worth installing solar panels?
Yes, it is worth installing solar panels in the UK. Solar panels have a proven track record of significantly increasing your energy efficiency and lowering your annual energy bills. Solar panels also increase the value of your property by up to 25%.
Conclusion
If installing solar panels is on your to-do list, you might want to consider doing so while these grants and special tariffs are still viable. Researching and applying for government grants can be a daunting and confusing task.
However, with a solar panel system investment, you want to be sure that you have considered all your options and have all the necessary admin in order.
If you have any queries about government funding or solar panel installation, contact Eco Happy. Our friendly staff can provide expert advice and guidance to make your solar panel installations hassle-free.
James Elston
Boiler Expert
James Elston is the top boiler replacement and heating expert at Eco Happy. He has over 20 years of experience in the industry, focusing on Gas Safe boiler installations and offering home-heating and energy-saving solutions to homeowners across the UK. From sourcing the most energy-efficient combi boiler to providing specialist heating advice, James ensures that Eco Happy maintains the highest standards and best customer service.