Solar panel grants and funding in the UK

by Holly Jackson a year ago 5 min read

Using energy from solar panels can save you money in the long run and benefit the environment by reducing carbon emissions. One common hurdle for homeowners, though, are the perceived high installation costs. Many people assume they can’t afford to have solar panels installed on their home. In previous blogs, we’ve discussed the average cost of solar panels, as well as how long it takes to see a return on your investment, but our focus here are solar panel grants and funding available in the UK.

After all, the government has ambitious plans for reducing emissions, so it makes sense there are options available to support the wider adoption of renewable energy sources. As with any grant, eligibility for the solar panel funding options we discuss will depend on a number of factors, including the receipt of certain benefits, and the type of property.

Whether you’re eligible or not, however, we’d urge you to get a personalised quote for how much it would cost you to get solar panels installed, as well as details on how much you could save on your energy bills.

Solar grants and incentives for homeowners

Zero VAT

If you’re installing solar panels on your home, you’ll have been eligible for a reduced VAT rate of 5% for some time. But in a government Spring Statement from 2022, it was announced that the VAT on ‘energy-saving products’ would be set at 0% (the typical charge is 20%). This includes solar panels, and energy-saving options for central heating, insulation and heat pumps. To quality, the panels must be used to generate electricity for domestic use and must be installed by a VAT-registered business. The reduced rate doesn’t apply to solar panels installed on a business property, and the 0% rate will end in March 2027.

Energy Company Obligation (ECO4) scheme

As part of the government’s ongoing efforts to support low-income households by creating more energy-efficient homes, ECO4 could mean your home solar panel installation could be fully funded – if you meet certain criteria. It’s designed to make homes warmer and households’ emissions lower. What’s more, ECO4 is available to people who rent their home, as well as those who own theirs. If you’re a landlord and your tenant claims certain benefits, you can encourage them to apply for ECO4. Not only will they benefit, but the improvements to your property’s energy efficiency will be advantageous for years to come.

ECO4 will be running until March 2026.

Eligibility criteria for ECO4

To qualify for ECO4, you need to be receiving income-related benefits. These are:

Jobseekers Allowance (JSA), income based
Employment and Support Allowance (ESA), income related
Housing Benefit
Pension Credit
Income Support (IS)
Universal Credit (UC)
Work Tax Credit (WTC)
Warm House Discount Scheme Rebate
Child Tax Credits
Child Benefit, depending on income threshold

There’s an online questionnaire you can fill out to find out the type of measures you may qualify for on a fully-funded basis under the ECO4 scheme. It’s worth noting that even if you qualify, an expert will need to check whether your property is suitable for solar panels or not.

Local Authority Flexible or LA Flex scheme

An extension of ECO4, the LA Flex scheme was created to support families in need who missed out on the ECO3 scheme (a previous iteration of ECO4). It was found that the criteria of ECO3 meant families at risk of not affording fuel couldn’t qualify, so the net needed to be widened.

That’s where LA Flex comes in, with more power placed in the hands of councils and local authorities to determine wider eligibility criteria for ECO4. It’s designed to help those who are most vulnerable during winters, and those in fuel poverty. To be in fuel poverty, households will be spending at least 10% of their income on heating the property they live in.

Eligibility criteria for LA Flex and LADS

Although local authorities set their own guidelines for LA Flex scheme qualification (it’s recommended you fill in an eligibility questionnaire), there are some common routes. These typically apply to the following situations:

Households with an annual income of £30,000 and below
Households with an individual or individuals with health problems exacerbated by living in a cold home. For example, respiratory issues or cardiovascular diseases.
A referral from the LA Delivery Scheme (LADS)

LA Delivery Scheme (LADS)

Now in its third phase of funding, LADS is designed to utilise local knowledge and regional expertise to identify those households which would benefit most from improved energy efficiency.

Although this is currently the final stage of funding for LADS, the government still has a way to go with the UK’s commitment to net-zero by 2050, so we could expect further grants and funding to become available.

Eligibility criteria for LADS

To be eligible, the property you live in must have an energy performance certificate (EPC) ratings of E, F or G and your total annual household income of £30,000 or less.

The Green Deal

The Green Deal is a government-backed way of helping people make energy-saving improvements to their home. If you need help paying for improvements which will influence your home’s energy efficiency, you may be able to get a loan through this scheme which you can pay back through charges added to your electricity bill.

The deal is attached to the property, so if you move you’ll no longer have to pay. If you’re moving into a property with a Green Deal (and you’ll be paying the electricity bill), then you must be shown the EPC to show the impact the improvements have made.

Eligibility criteria for The Green Deal

The scheme is designed for households with electricity meters in England, Scotland or Wales. This includes prepayment meters. It’s available for homeowners and landlords, although both the landlord and tenant must agree to any improvements.

The Smart Export Guarantee (SEG)

Not a grant as such, but an opportunity to make money from your solar panel installation, the Smart Export Guarantee is designed to pay back households and businesses that generate their electricity using small-scale renewables such as solar panels. Since its launch in 2020, the SEG requires all suppliers with at least 150,000 customers to offer a payment for exported electricity to small-scale generators.

Under the SEG, customers who generate their electricity from solar panels and other small-scale renewables and then export it to the grid will receive a payment for their excess energy. The payment rate varies depending on the supplier and the time of year, so it's essential to check with your energy supplier and shop around for the best tariff where possible.

If you’re interested in ways to improve your home’s energy efficiency, there’s more information on energy grants on the government website. In addition to support for solar panels, you can find out if you’re eligible for grants for other installations to capture renewable sources of energy, such as heat pumps and boilers.

FAQs

What happened to the Feed-in Tariff?

Before SEG, the Feed-in Tariff (FIT) allowed people who generated electricity via solar panels (or wind turbines) to receive a certain amount of money for each unit they produced, as well as selling the excess electricity to the grid. The tariffs were generally higher than what is now available via SEG. Although FIT closed to new applications in 2019, those who were registered continue to benefit now.

If I don’t qualify for any solar panel grants, how much will they cost me?

The average cost of solar panels is around £5,000, but the total cost of an installation will vary depending on factors such as the number of panels, whether a battery is included, and local variations.

Discover how much you could save with a solar installation