Solar Panel Grants

0% VAT

Since April 202, homes in the UK can benefit from zero VAT on the materials and installation of energy-efficient measure, including solar panel systems and heat pumps, to help households reduce energy bills and enhance energy efficiency.

This VAT-free period will end in March 2027, at which point the rate will revert to 5%. To take advantage of these savings before the period ends, consider comparing solar panel installation prices to maximise your savings.

According to the UK Government, a typical family with a home solar panels system can save over £2,300 on installation costs (for an average 2-3 bedroom house using a 3 or 4kW system with a home storage battery), thanks to the reduction from the original 20% VAT to 0%. Additionally, estimates suggest that such households could save up to £660 annually on energy expenses, reducing the break-even point of the system from approximately 17 years to around 9 to 12 years. The 0% VAT rate also applies to other energy-saving materials besides solar panels, including heat pumps, biomass boilers, insulation, and more. You can find out more on the government site here. The VAT saving will automatically be applied when you are invoiced for your solar PV system, so there is no need for an application.

Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG), which took effect on 1 January 2020, is currently active. It allows small-scale low-carbon electricity generators to receive payments for surplus electricity they export back to the grid. While SEG is not a direct government grant, all licensed suppliers are required to offer an export tariff to their customers. Suppliers with over 150,000 customers must provide this tariff, while smaller suppliers can choose to participate voluntarily.

As an SEG Generator, you have the flexibility to shop around and compare different companies to find the best price per kWh for your exported electricity. You can determine the contract length and rate they offer, which generally ranges between 1p and 20p per kWh. Since you can choose any SEG Licensee, even if they are not your current electricity supplier, shopping around will help you secure the best deal. On average, the rate tends to be around 5.5p per kWh.

All homeowners with standard solar panel systems are eligible for the SEG, as long as their pv system has a capacity of up to 5MW, which is significantly larger than the typical domestic 1kW system. Additionally, the house must be equipped with a smart meter to measure the exported electricity. Some energy suppliers offer special rates specifically for energy exported from certain solar batteries, which can influence the overall cost-effectiveness of combining home solar battery storage with your solar panel system. SEG rates vary depending on your supplier.

ECO4 Scheme

The ECO4 (Energy Company Obligation) scheme replaced ECO3 on 1st April 2022 and will run until March 2026. The UK government has allocated £4 billion spread over four years to improve the energy ratings of homes and reduce carbon emissions. ECO4 differs from ECO3 by broadening eligibility through LA Flex, or flexible eligibility. The scheme officially commenced on 27 July 2022, but eligible measures installed from 1 April 2022 to March 2026 can qualify for ECO4 support.

Is the ECO4 Scheme worth it?

The ECO4 scheme allows low-income households to upgrade their inefficient heating systems to more efficient and environmentally friendly options, such as solar PV panels. Depending on your home’s qualifying factors, the scheme can potentially provide entirely free solar panels. ECO4 aims to upgrade approximately 450,000 homes, primarily to EPC band C. Qualified households are expected to reduce their average energy bills by around £290 annually, with potential savings of up to £1,600 for the least efficient homes.

Eligibility Criteria

The ECO4 scheme is designed to assist low-income, fuel-poor, and vulnerable households by reducing upfront solar panel costs. To be eligible for solar PV panels, your home must meet specific criteria:

• Household income of less than £31,000.
• Current inefficient heating system within the D-G energy efficiency band.
• Ownership and residence in the home, or residence in private rented accommodation (with landlord’s permission).
• Receipt of government benefits (e.g., child benefits, income support).
• All-electric homes (both on and off-gas) where biomass boilers or District Heat Network are not viable options.

If you are not receiving benefits but are considered low-income, you may still qualify for ECO4 under the ECO4 LA Flex. LA Flex allows councils to set eligibility criteria based on regional needs, considering factors like age, number of occupants, number of children, and house condition. This flexible approach means more people in the UK can access solar panel grants. The application process involves a telephone assessment where you will answer questions about your home and heating needs. An installer will then visit your home to confirm its suitability for ECO4 and determine the most appropriate energy-efficient measures.