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Last updated: 27 May 2022

All Solar Panel Grants in the UK

What Solar Panel Funding Options Are There?

All solar panel grants in the UK

Benefits:

✔ Solar panels can help reduce your bills by up to 70%

✔ With the RHI scheme (expiring soon!), you can save up to £2,981 on solar thermal

✔ This is the right time + Switching to solar and utilising grants will help you save energy bills for the typical household will rise by £693 a year starting April 2022!

In this article we’ll answer the perennial question asked year after year - are solar panels worth it in the UK in 2022? This year the answer is a whopping yes because of the viability of the ECO4 (Energy Company Obligation Scheme).

Through ECO4, the government had 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 will drop to 0% for a 5 year period!

Latest news: VAT on solar panels is scrapped until 2027!

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%. So, 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 four notable incentives for solar panels in the UK that will be covered in this guide:

Solar Grants in the UK
UK Solar Grants Run Time Potential Savings
Renewable Heat Incentive (RHI)

Expires March 31st 2022!

Up to £2,981
Energy Company Obligation April 1st 2022 - 2026 FREE solar panel possibility
Smart Export Guarantee January 1st 2020 - (unknown) 2 - 5.6p per kWh
Feed-in Tariff

2010 - 2019

(Those registered will continue to benefit)

Generation Tariff - 6.38 - 13.88p per kWh

Export Tariff - 4.77p per unit

RHI applies to solar water heating only.

Before we dive into the specifics of each grant, it’s important to mention that the key to maximising savings through solar panel funding provided by the UK government 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 70%!

Maximise savings through grants by comparing up to 4 tailormade solar panels available near you. Just select your region.

Solar quotes in England

England

Solar quotes in Scotland

Scotland

Solar quotes in Wales

Wales

Solar quotes in Northern Ireland

Northern Ireland

1. Domestic RHI (Update: Hurry! Scheme Expires March 31, 2022!)

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 it can ideally recoup the majority of the costs of the installation since solar thermal panels cost around £ 4,000 on average. Soon enough your panels will start paying for themselves as you will own your energy and won’t be victim to price fluctuations. Solar thermal panels are around 80% efficient and so you’ll need a lot less of them on your roof.

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.

Why is Switching to Renewables and Applying For the RHI Now a Prudent Decision?

Now is the best time to apply for the domestic RHI on tailormade solar panels as dual gas and electricity bills are set to rise by more than 50% to an average of just under £2,000 starting April 1st 2022. In more recent news, analysts have predicted that the war in Ukraine would result in a further 50% hike when the ceiling is reset in October, putting households on track to spend £3,000 per year. According to recent sources, bills might rise to £4,000 each year.

Maximise Savings Via Tailormade Panels

In less than a minute

2. ECO4 Scheme - More UK Homes to Benefit Under Flexible Eligibility

ECO4 (Energy Company Obligation) is set to replace ECO3 from 1st April 2022 and will run until 2026. The government has allocated 4 billion pounds - 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 Fflex or flexible eligibility.

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 (for 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.

How Much Can I Save Through the ECO4 Scheme?

The details of the scheme are yet to be hashed out, but the potential rewards seem promising based on the previous run. Under ECO3, many suppliers could typically fund all upgrades like new boilers when installing with other energy-saving measures like: Cavity wall, underfloor or loft room insulation. By tying full support to another measure, the government maximizes the potential for energy savings in your home, lowering your CO2 emissions dramatically.

Again, the first step before applying for grants is locking 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.

Maximise Savings Via Tailormade Panels

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3. Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG) came into effect on 1 January 2020 and is currently the only type of solar panel funding available in the UK.

The SEG enables small-scale low-carbon electricity generators to receive payments for the 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 on a voluntary basis.

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 meter, in order to measure the exports. Most energy suppliers also offer a tariff for energy exported from solar battery storage systems.

This incentive makes solar panels a great type of green home improvement project.

Solar Panel Funding - What options are there?

4. Reduced VAT for Energy-Saving Products

Starting April 2022, homes can now benefit from zero VAT on the materials and installation of energy-efficient measures until March 2027. 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.

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 new zero VAT rules also welcomes 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.

5. Feed-In Tariff (FIT)

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 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 from a list of registered suppliers. The payments are divided into two types:

  • The Generation Tariff is a set amount of all the energy produced and used that depends on the factors mentioned before. The tariff ranges between 6.38-13.88p per kWh/h depending on the size of the system;
  • The Export Tariff relates to the electricity in excess that you sell, for which you will get 4.77p per unit. You will be able to sell half of the total energy you produce. 

Domestic Solar Panel System

Free Solar Panel Scheme: What Was It?

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. 

Is UK Solar Panel Funding Legitimate?

The answer is yes. Through RHI, it’s possible to recoup the majority of the installation costs of solar and through ECO4, it may be the case that the full cost could be covered - and as a bonus, the costs of other energy-saving measures like insulation as well ⁠— if you as a homeowner meet the criteria.

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 tailormade to the requirements of your home and we make it easy for you to make an objective decision by comparing up to 4 tailormade 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, you can head back to GreenMatch to receive free, non-binding quotes for solar panels, heat pumps and boilers.

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Meghna Joshi
Written by Meghna Joshi, Copywriter

Meghna is a Copywriter at GreenMatch. She has a background in literature and film and has experience writing for social as well as native and display channels. In addition to routinely blogging about the latest marketing technologies, Meghna also writes about hearing health for Hearing Aid Clinics, which sparked her burgeoning interest in SEO. With a keen interest in sustainability, she has been a volunteer writer for zero-waste initiatives in the past and is currently centering more of her personal writing around interviewing local environmental changemakers.