Solar panels are a great environmentally friendly way to produce free electricity for your home, however, the question remains, are they worth buying in the UK as of 2023? In this article, we’ll answer this question by going through the different government schemes available to you, with the recent addition of the ECO4 (Energy Company Obligation Scheme).
✔ Solar panels can help reduce your bills by up to 70%
✔ With the ECO4 scheme, the least energy-efficient homes can save up to £1,600 annually!
✔ This is the right time. Switching to solar and utilising grants will help you save in spite of rising energy bills.
Saving money on a solar panel doesn’t stop at getting a grant. By comparing quotes, you’ll be ensuring that you get the best deal on the market. The quote comparison process is easy and streamlined with GreenMatch.
You can get up to 4 competitively priced quotes from different local installers by completing in our 30-second form. Just click the button below to get started.
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Through the ECO4 Scheme, the government allocated £4 billion towards the installation of solar panels and heat pumps across the UK. The government is also letting councils decide what the eligibility criteria will be depending on the needs and specific circumstances of people in the area.
This is a big win, since previously, many people who needed grants didn’t meet the narrow criteria set out. What’s notable about ECO4 is that eligibility isn’t just limited to household income or people on benefits, but can expand to accommodate age and health of residents, number of people in the house, condition of the home, etc.
So, between 2022-2026, there’s a much greater chance of actually getting a solar panel grant. This is bolstered by the fact that Chancellor Rishi Sunak announced in March 2022, amidst the energy price crisis, that the VAT for solar panels has gone down to 0% for a 5-year period!
In April 2022, Europe witnessed energy prices driving inflation to numbers that haven’t been seen in more than 40 years! And more than 40% of this inflation increase comes from energy prices.
To help households reduce energy bills and increase energy efficiency, the UK government announced a reduction of the current 5% VAT relief on energy-saving measures (e.g. solar panels, heat pumps) to 0%. According to the UK Government, a typical household with rooftop solar panels will save more than £1,000 in total installation costs, in addition to £300 in yearly energy expenses.
In March 2027, the VAT-free period will end, and the rate will return to 5%. If you want to get a head start before it ends, you can begin by comparing solar panel prices to save you the most money.
Promoting the use of renewable energy sources has been on the UK government’s agenda for many years now. The EU’s Renewable Energy Directive set out for all member countries to reach a 32% renewables target before 2030. The UK has been working towards that goal, as the focus is to move in this direction by introducing more schemes and incentives in the renewable energy sector.
This tendency was accompanied by a decrease in the cost of solar panels, so new buyers do not need to worry. Though there aren’t any grants in the traditional sense, there are opportunities for solar panel funding in the UK. Currently, the only scheme open to new applications is the Smart Export Guarantee (SEG).
Overall, there are six notable incentives for solar panels in the UK that will be covered in this guide:
|UK Solar Grants||Run Time||Potential Savings|
|Energy Company Obligation 4 (ECO4)||April 1st 2022 – March 2026||Partially or fully FREE solar panel possibility|
|Smart Export Guarantee (SEG)||January 1st 2020 – (indefinite)||1 – 7.5p per kWh|
|0% VAT||April 1 2022 – March 2027|
£1,300+ on installation & energy bills
|Renewable Heat Incentive (RHI)|
Expired March 31st 2022!
|Up to £2,981|
2010 – 2019 (Expired)
(Those registered will continue to benefit)
Generation Tariff – 6.38 – 13.88p per kWh
Export Tariff – 4.77p per unit
|Free Solar Panel Scheme||Expired March 2019||Fully free solar panel system (£5,000-£11,000)|
Available solar panel grants in the UK as of September 2022
ECO4 (Energy Company Obligation) replaced ECO3 from 1st April 2022 and will run until March 2026. The government has allocated 4 billion pounds– it spreads 1 billion across 4 years– to improve the energy ratings of UK homes and reduce carbon emissions. ECO4 is distinct from ECO3 in that more people will have the chance to qualify because of LA Flex or flexible eligibility.
The scheme came into effect on 27 July 2022, but ECO4 can be applied to eligible measures installed from 1 April 2022 to March 2026.
ECO4 allows low-income households the opportunity to replace their inefficient heating system with a more efficient and environmentally friendly system, such as solar PV panels.
The ECO4 is estimated to upgrade approximately 450,000 homes, mostly to EPC band C. Qualified households will reduce the average household energy bills by around £290. But for the least efficient homes, this could save as much as £1,600 annually.
The ECO4 scheme is open to low-income, fuel-poor and vulnerable households receiving benefits. To be eligible for solar PV panels, your home needs to meet specific requirements:
If you are currently not receiving benefits but are considered low-income, you may still qualify for ECO4 under the ECO4 LA Flex.
LA Flex gives councils the flexibility to determine eligibility criteria in their region — criteria are no longer limited to availing benefits or even based on income and will be tailored to the circumstances of people in the area (e.g., age, number of occupants, number of children, condition of the house, etc.). This means that more people in the UK will be able to get solar panel grants.
If you’re interested in the ECO4 scheme and want to apply to it, all you need to do is contact a participating energy supply. They will then conduct a telephone assessment by asking you questions about your home and your heating needs. Then you can arrange a date for an installer to visit your home to confirm whether it’s suitable for ECO4 and which energy-efficient measure would be best suited.
Before moving on to the rest of the available grants in the UK, it’s important to mention that the key to maximising savings through solar panel funding is choosing the right panels. You don’t want to apply grants to sub-par panels or panels that aren’t the right fit for your home.
The right panels are tailormade to the energy-saving needs and specificities of your home for maximum efficiency. Tailormade panels can slash annual UK energy bills by over 70%!
Maximise savings through grants by comparing up to 4 tailor-made solar systems available near you. Just click on the button below:
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The Smart Export Guarantee (SEG) came into effect on 1 January 2020 and is currently active. It enables small-scale low-carbon electricity generators to receive payments for any surplus energy they export back to the grid.
Although this is not a direct government grant, all licensed suppliers must now offer an export tariff to their customers. Those suppliers with over 150,000 customers are obligated to offer a tariff, while those with fewer can partake voluntarily.
This incentive makes solar panels a great type of green home improvement project.
As an SEG Generator, you can shop around for different SEG Licensees to see who offers the best price per kWh that is exported. You can determine the contract length and rate for which they offer. Generally, the rate will range between 1p and 7.5p per kWh. Because you can choose any SEG Licensee, even one that’s different from your electricity supplier, shopping around for the best rate will get you the best deal.
Based on a 7.5p per kWh rate, the average owner of a three-bedroom home with a 3.5 kWp solar panel installation will currently earn £112 per year under SEG.
All homeowners with regular solar panel systems (up to 5MW capacity) are eligible under the SEG. In addition, the house must be fitted with a smart metre, in order to measure the exports. Some energy suppliers also offer only special rates for energy exported from specific solar batteries. This will determine whether the overall solar battery storage price together with the solar system will go down.
To be an SEG Generator, you will need to shop around for an SEG Licensee (an electricity supplier authorised to offer an SEG tariff) and apply directly to them. All SEG Licensees are obliged to offer an SEG tariff to all eligible generators. However, each one will have its own specific application process that you will need to follow up on.
Before you can start applying for SEG tariffs, you need to first lock in an energy-efficient and tailormade panel that’s suited to your home’s needs. This will ensure you are saving at the start itself since you don’t want to apply grants to panels that are sub-par or not a fit for your home.
GreenMatch can save you the time and effort it takes to find the best deals for the best solar panels tailored to your household and home. Instead of calling multiple installers to explain your heating system situation, you can spend the time preparing to apply solar panel grants and benefits to your newly installed solar system.
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Starting April 2022, homes in the UK can now benefit from zero VAT on the materials and installation of energy-efficient measures.
After five years, the VAT-free period will end, and the rate will return to 5%. So, the combination of solar panel grants plus the scrapping of the VAT brings homeowners closer now more than ever to achieving renewable energy sources.
The VAT on renewables was 5%, which was already low, but scrapping it will see the typical family with rooftop solar panels saving more than £1,000 on installation and £300 annually on their energy bills.
The 0% VAT also applies to other energy-saving materials, besides solar panels, such as heat pumps, biomass boilers, insulation, and more.
The new zero VAT rules also welcome the permanent removal of specific eligibility criteria that previously applied to the 5% reduced rate. You can read about this on the government’s website for the full details.
To be eligible, your home and new installation need to meet some specific requirements to benefit from a 0% VAT rate:
If the installation and energy-saving material qualifies, then the 0% VAT will be automatically applied by your installer. Hence, there’s no need to complete any application process.
The Domestic Renewable Heat Incentive (RHI) expired on 31 March 2022 to new applications. Through the RHI, homes could save up to £2,981 on solar thermal panels. It has since been replaced by the Boiler Upgrade Scheme (BUS). However, BUS is intended for upgrading to heat pumps and biomass boilers, not solar panels.
Through the Domestic RHI, you can save up to £2,981 on solar thermal panels. Unlike solar PV, solar thermal doesn’t generate electricity but has two main advantages. They use sunlight to heat your water which can be used as a wet central heating system and can also be supplied to your taps and showers.
You will receive domestic RHI payments over 7 years that can ideally recoup the majority of the costs of the installation since solar thermal panels cost around £4,000 on average.
The property must first obtain an Energy Performance Certificate (EPC) assessing its energy efficiency and how it could improve, which is required for the RHI application.
The Feed-in Tariff was implemented in 2010 and ran successfully for many years. The FIT scheme closed for new applications in 2019, however, those that are currently registered will continue to benefit from it.
Under this scheme, those who generate electricity via solar panels or wind turbines receive a certain amount of money for each unit (kilowatt per hour) they produce, and for the extra electricity they sell back to the grid.
The specific amount received varies based on the size of the system, the type of technology and when it was installed. The amount differs from for instance 3kW to 6kW solar systems in the UK. The payments last for a total of 20 years from the date of registration, significantly reducing the payback time of the initial investment.
You had to choose a certified installer, and you were then able to choose between receiving the payments from your energy supplier or a list of registered suppliers. The payments are divided into two types:
Previously, if you could not afford to buy solar panels, you had the option of acquiring them for free from companies that would rent your roof space for up to 25 years. With this scheme, a company would offer to provide the free solar panels, take care of solar panel installation and maintenance for free, and in return receive the Feed-in Tariff (FIT) payments.
Instead, a scheme called ‘solar buyback’ has become another possibility, where companies offer homeowners a lump sum upfront, and in return collect the FIT payments the homeowner would have received. However, it is important to evaluate an offer like this in relation to the total FIT payments you would receive to determine whether or not this buyback scheme would be worth it.
The answer is yes. Through ECO4, it’s possible to recoup the majority of the installation costs of solar panels. As a bonus, you can also recoup the costs of other energy-saving measures like insulation as well — if you as a homeowner meet the criteria. And through the Smart Export Guarantee, you can earn money by generating extra electricity from your solar panels.
To maximise your savings, it’s important to stay up to speed with grants — GreenMatch reviews solar panel funding regularly and our articles are updated in line with recent government announcements.
Additionally, it’s important you ensure you apply grants to the right panels. There’s no point in getting a grant for a panel that’s sub-par or not suited to your home. The right panel is tailor-made to the requirements of your home and we make it easy for you to make an objective decision by comparing up to 4 tailor-made solutions available near you.
You can find further information regarding the different energy grants on the Government’s website, where you will find all the information you need about the aids related to solar panels, as well as grants for other renewables, such as heat pumps and boilers.
After collecting the information, if you decide to invest in solar power or other sources of clean energy, GreenMatch can help you receive up to 4 free, non-binding quotes for solar panels, heat pumps and boilers.
Instead of calling multiple installers to look for the prices, we can help you by using our network of trustworthy solar panel installers to help save you time and effort. All you need to do to get started is click the button below and answer some questions about your heating demands. We’ll take it from there for you.
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