Solar panel grants in the UK make it cheaper and easier to switch to green, renewable energy.
Solar panels capture energy from daylight and convert it to electricity that can power your home. They help you generate renewable energy, reduce your carbon emissions and make substantial savings on your energy bills.
You might assume getting solar panels is complicated and expensive, but it doesn’t have to be. Setting up a solar energy system in your home and switching to a greener power source is much cheaper and easier with solar panel grants. These grants can lead to long-term cost savings, increased property value and reduced emissions.
You may be eligible for a grant if you receive certain types of benefits and live in a specific type of property.
Pay 0% VAT on solar panels in UK
In its Spring Statement 2022, the former chancellor Rishi Sunak announced that VAT on ‘energy-saving products’ would be set at 0%, a reduction from the previous rate of 5% and the typical charge of 20%.
According to the government website, there is no distinction between solar PV, solar thermal and hybrid solar panels, but solar batteries are not included. There are some restrictions for those in Northern Ireland; homeowners only qualify for eligibility if they are over 60 or receive some form of benefit (for instance Child Tax Credit or Housing Benefit). All eligible parties (in Great Britain and Northern Ireland) will be reliant on installers and suppliers in order to qualify for this reduction; the products cannot be bought or installed DIY.
Further, the government website states: “If the cost of the products (not including VAT) is 60% or less of the total cost of the installation (not including VAT), you’ll pay 5% on everything.” If the products cost more than 60% of the total cost of installation, homeowners will pay 5% VAT on the labour and the standard rate of 20% for the products.
In addition to solar panels, ‘energy-saving products’ extends to central heating, insulation and heat pumps. This reduction in rate is time-limited and will end in March 2027.
Energy Company Obligation (ECO4) scheme
ECO4 is the latest phase of an ongoing government scheme to support low-income households by creating more energy-efficient homes. The scheme is all about saving energy, making homes warmer and reducing carbon emissions. It aims to ensure large energy companies support income-restricted households via their local authorities.
The government initially launched the ECO scheme in 2013, and the previous version, ECO3, was replaced by ECO4 in April 2022.
ECO4 allows you to apply for solar panels grants over the next four years, which could give you access to fully-funded solar panels for home installation.
Grants for solar panels UK – do you qualify through ECO4?
The ECO4 scheme is open to all UK homeowners regardless of whether they own or rent their property. If you’re eligible, you can receive free or discounted solar panels. The support you receive will depend on your energy supplier and individual circumstances.
ECO4 is available to:
- Homeowners, landlords and private tenants
- People receiving income-related benefits
- Properties with inefficient electric heating
Qualifying benefits for the ECO4 scheme include:
- 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
The Child Benefit income threshold to qualify for ECO4 varies depending on how many children you have and whether you’re a single or two-parent household.
- One child – £19,900
- Two children – £24,800
- Three children – £29,600
- Four or more children – £34,500
- One child – £27,500
- Two children – £32,300
- Three children – £37,200
- Four or more children – £42,000
You can apply directly via your energy supplier or assess your eligibility by filling out their ECO4 eligibility questionnaire. A surveyor will then evaluate your premises and determine whether they’re suitable for solar panels.
The LA Flex scheme
LA Flex is short for Local Authority Flexible Eligibility. The scheme is an extension of ECO4. LA Flex is one of the tweaks and improvements made through the iterations of ECO3.
Many UK households fell through the cracks due to how the ECO3 scheme determined eligibility. Under the previous criteria, families at risk of not affording fuel couldn’t qualify, so the government created LA Flex to widen the net.
LA Flex gives councils and local authorities power to widen the eligibility criteria. In other words, it’s an alternative route into the same ECO4 funding, with similar measures but different eligibility criteria.
With LA Flex, you can qualify for free funding that covers the costs of energy-saving measures, such as solar panels for homes running on electric heating systems.
Who is eligible for the LA Flex scheme?
LA Flex targets two groups:
- People in fuel poverty (households that spend at least 10% of their net income heating their home)
- People who are the most vulnerable during cold weather
There are three routes to securing funding for solar panels through the LA Flex scheme:
Route 1 (low household income): Annual household income of under £31,000.
Route 2 (health): Health problems exacerbated by living in a cold home, such as cardiovascular, respiratory and mobility issues, or immune-suppressed conditions.
Route 3 (multi-proxy eligibility): Energy bands E, F or G and meeting any two of the following criteria:
- House is in the LSOA 1–3 area.
- The householder receives a Council Tax rebate based on low income only.
- The householder is vulnerable to living in a cold home, as identified in the NationaI Institute for Health and Care Excellence (NICE) guidance.
- The Local Authority Delivery (LAD) scheme, which aims to support vulnerable and low-income households, has referred the householder.
- Members of the household receive free school meals.
- The household struggles with sustained debt on mortgage payments and utility bills, and has been advised to seek support from the local authority by the mortgage lender, the energy supplier or Citizens Advice.
Local authorities set their own rules for LA Flex scheme qualification.
The Green Deal
The Green Deal was a government scheme giving households loans for energy-efficient home improvements.
The original Green Deal scheme ran from 2013 to 2015 when the government stopped financing the Green Deal Finance Company.
Thanks to private investors, the Green Deal Finance Company started offering loans for selected energy-efficient home improvements once again in 2017. According to Which? you can still get loans to fund energy-efficient changes in your home and pay the money back through your energy bills.
Through this scheme, you can get funding for various energy saving improvements, including installing solar panels to create renewable energy.
Who is eligible for the Green Deal scheme?
You could be eligible for the scheme if your household has an electricity meter, including a pre-paid meter. If you live in a rented house, you and your landlord must agree to the improvements.
The loan is attached to the property and not you. If you sell your house, it passes to the new owner. Green Deal loans differ from bank loans and other credit facilities in that you repay the loan through a charge added to your electricity bill.
To get funding through the Green Deal scheme, you must get your property assessed by a registered Green Deal assessor. The assessment provides an advice report with a statement on whether the improvements will pay for themselves through reduced energy costs and how much you can save in annual energy bills.
The Smart Export Guarantee (SEG)
The SEG scheme doesn’t offer solar panel grants directly; instead, it provides an alternative way for households to save money on installing a solar energy system.
Solar panels are an investment for the future, and SEG delivers a solution to reimburse your investment and make the upfront costs negligible.
The SEG scheme launched in 2020 and requires energy suppliers with over 150,000 customers to pay homeowners for unused solar-generated electricity. Solar PV panels must be present in your home or business, and you can feed any electricity you don’t use into the National Grid.
Under SEG, you get paid for every unit of electricity you give back.
Who is eligible for SEG?
You must install a renewable electricity-generating system to be eligible for SEG (such as solar panels). You will also need a smart reader, since you’ll need to provide half-hourly export readings. Your installation and installer should be certified through the Microgeneration Certification Scheme (MCS), and you’ll need to show this.
To receive payments through SEG, you must apply to an SEG licensee – an electricity supplier that offers a SEG tariff. SEG licensees must provide a tariff if you have installed qualifying solar panels. The SEG tariff will always remain above zero, and the SEG licensee doesn’t have to be the same as your current energy supplier. Tariffs can change over time, so check them regularly to ensure you’re on a competitive tariff.
The cost of solar panels in the UK
The cost of solar panels in the UK has dropped in the past decade, so there has never been a better time to install them and switch to renewable energy. The average domestic solar PV system costs around £6,000.
Factors that will influence the amount you pay include your choice of installer, the quality of your panels, the size of the array, ease of roof access and whether you choose building-integrated panels or panels that sit on top of your roof.
Alongside various grant schemes, you can now save even more with the current 0% VAT rate. If you purchase a solar panel system today, you can typically break even in around 5-7 years and save about £1,200 annually in SEG revenues and energy bill savings.
Saving money on electricity bills
Solar panels can ease the pressure on your household budget as electricity prices rise. They rely on daylight, which is a free and powerful energy source. The average UK household can expect to save up to £1,000 per year on their energy bills with a solar panel system.
There’s also no need to worry about generating electricity in the UK’s cloudy weather conditions. You can harness solar energy from anywhere in the UK every day, no matter the weather. Solar panels still generate electricity on gloomy or cloudy days and only need light to function. However, the brighter the light, the higher the output.
Get paid for generating excess energy
You might not use all the electricity your solar panels generate, and you can choose what to do with the excess energy. You can store it to use outside of daylight hours with a solar battery, or you can export it to the National Grid and receive payments from energy companies through the SEG scheme.
Solar panels can last a long time with little to no maintenance. You only need to clean them a couple of times a year. There are no moving parts and you don’t have to worry about repair costs or wear and tear.
Most solar panel manufacturers offer warranty periods of 20 to 25 years.
Solar energy is renewable and eco-friendly
Switching to green, renewable energy is a key benefit of installing solar panels. Unlike other energy sources which rely on fossil fuels, solar panels can lower your carbon footprint and reduce your impact on the environment.
Independence from the National Grid
Solar panels can help you generate electricity in areas without access to the National Grid. The storage capacity of solar batteries can give you complete energy independence. This also means you won’t have to deal with energy suppliers and price increases.
What other solar panel grants used to be available?
In an effort to introduce solar technology as a mainstream home improvement, the government used to offer various incentives and grants that were very enticing.
Renewable Heat Incentive
First launched in 2014, the Renewable Heat Incentive (RHI) scheme closed for new applications on 31 March 2022. Through the RHI, the government would pay quarterly payments of 20.66p/kWh for seven years after installation of solar panels, eventually amounting to a saving of £2,981.
The RHI only included heat-generating renewables, so those with thermal solar panels benefitted, while solar PV panels were excluded. The Boiler Upgrade Scheme, launched in April 2022, is its natural successor, but does not include solar panels.
The Feed-in Tariff (FiT) was launched in April 2011 and closed to new applicants in April 2019. During these eight years, homeowners would receive payments for any surplus electricity (paid by kWh) generated by their domestic solar panels that was then supplied back to the grid.
Those who signed up for the scheme will receive payments for 20 years from the date of registration with payments depending on the size and type of the solar PV array.
Free solar panel scheme
For a time, if you could not afford the upfront costs to install solar panels, companies would essentially rent roof spaces, install PV panels for free and absorb the costs of maintenance. In return, homeowners would benefit from the FiT payments. Schemes like this in the majority stopped running in 2019 as FiT ended.