Grants for solar panels – what Government help is available?
Discover the latest grants for solar panels, and you could benefit from renewable energy for less. And while fewer schemes exist now than in previous years, homeowners can still access grants to help with installation costs. And as these can run into the thousands of pounds, it’s an option well worth considering.
Choosing solar panels for the home can be a complex process. Not all homes are suitable for panels, and different panel types are best suited for different properties. But solar panels can make a big difference to your energy bills. A typical household with a 3.5 kilowatt-peak system could save between £170 and £445 a year, according to the Energy Saving Trust.
Here we look at the schemes which currently offer grants for solar panels, and assess the key information you need to know about how they operate.
Image credit: Getty Images/Ashley Cooper
Can you get free grants for solar panels in 2022?
Until it closed in 2019, the Government ran the Feed-in-Tariff, a scheme in which energy companies essentially bought your solar panels for you. They’d even install them on your roof and you could benefit from the free electricity provided.
You can make big savings on solar panels through grants, but it isn’t possible for most homeowners to access free solar panels.
Which types of solar panels are available through grant schemes?
You’ll notice two distinctions of solar panel throughout this article: solar photovoltaic (PV) panels, which generate electricity from sunlight, and solar thermal panels, which generate heat for use in your domestic hot water cylinder.
How much would I expect to pay without a grant?
So how much do solar panels cost? Our in-depth guide explains more, but you can expect to pay anywhere between £5,000-£8,000 for a solar PV system and £4,000 to £5,000 for a solar thermal system, according to Checkatrade.
These figures might seem lofty, but their energy-saving impact can be considerable, says Jack Sutcliffe, co-founder of Power Sheds. ‘Particularly with the spike in energy bills that we’re currently seeing, any method that can help with energy efficiency is extremely valuable. Solar panels certainly fall into this category; they are green and effective energy sources that can help reduce operating costs significantly.’
Image credit: Getty Images/Claire Plumridge
What grants for solar panels are available in 2022?
1. The Energy Company Obligation
The Energy Company Obligation, or ECO scheme, is a requirement for energy suppliers with more than 150,000 customers to reduce the costs of home heating by fitting energy-saving improvements.
Funding is prioritised to vulnerable and low-income households, helping those in fuel poverty who would otherwise struggle to afford the cost of solar panels. Having begun in 2013, the latest version of the scheme (ECO3) will run until March 2022 before being replaced by ECO4, which will continue to offer solar panel grants.
Who is eligible?
You might be eligible for ECO funding if you receive certain benefits, although it’s important to be aware that the qualifying criteria could change in April when ECO3 becomes ECO4. The full proposed eligibility criteria can be found in the Government’s Energy Company Obligation report.
You may also be eligible if you receive the Warm Home Discount (which helps fuel-poor homes), or if you live in a house that has an Energy Performance Certificate (EPC) of D or lower. You’ll need to either own your home or have the permission of your landlord to be eligible.
How do I apply?
Fill in the questionnaire at Eco3.org.uk to assess your eligibility. If you qualify, you can book a technical surveyor to come to your home. They will assess which improvements will most improve your energy efficiency.
How much could I save?
Under ECO3, energy companies can choose how much funding they provide, as well as the installer that does the work. This means that while you could save around £6,000 – the typical cost for solar panels – the amount of funding you will be offered will depend on your eligibility and how effective installing solar panels will be for your home.
2. The Renewable Heat Incentive (RHI)
The RHI is a government scheme which, as it says on the tin, promotes the use of renewables. Solar thermal panels are available through this scheme, providing they are Microgeneration Certification Scheme (MCS) certified. This is an important point and you’ll need this information as part of the application process.
The scheme ends in March 2022, so you’ll need to be quick to get your application in. Under the Boiler Upgrade Scheme, which will replace the RHI from 1 April, solar thermal will not be directly supported. But the government has said some solar panels can be installed as part of a heat pump system which is funded on the scheme.
Who is eligible?
You can apply if you live in England, Scotland or Wales and you own your home. Self build homes are eligible, too.
How do I apply?
Homeowners can apply through the Ofgem website. However, before you can receive payments, you’ll need to have an EPC completed, and any recommendations made, such as additional insulation, will need to be installed.
How much could I save?
The scheme offers payments which are paid back over a seven-year period. But funding – and therefore how much you’ll save – will be based on the estimate of a solar system’s performance.
3. The Smart Export Guarantee (SEG)
The SEG launched in 2020 to replace the Feed-in-Tariff, and requires energy suppliers with 150,000+ customers to pay homeowners for any unused solar-generated electricity. This means that you’ll already need to have solar PV panels installed, but an SEG tariff can still save you money on your electricity.
Who is eligible?
Homeowners with MCS-certified solar PV panels installed may be eligible. But you’ll also be required to have a registered smart meter installed that records your exported electricity.
How do I apply?
You can apply through your energy supplier – for example, this is the SSE’s Smart Export Guarantee’s application form. It’s recommended to read Ofgem’s Guidance for Generators document first.
How much could I save?
With the SEG it’s really more ‘how much could I earn?’. While this can depend on factors such as your electricity usage and your export tariff rates, households on the highest SEG rate could save £82 a year, according to Which?
James Andrews, Senior Personal Finance Editor at Money.co.uk, says, ‘people may be put off the idea of solar panels as they think the UK’s frequently grey skies won’t generate enough energy. However, even on gloomy days panels still produce power.’
‘This is a great thing because the Smart Export Guarantee means households can get paid for their solar energy output. This might not be as generous as the feed-in tariff scheme it replaced, but it still means energy you don’t use yourself isn’t entirely wasted.’
4. VAT reductions
In the March 2022 Spring Statement, Chancellor Rishi Sunak announced that VAT will be scrapped for energy efficiency measures. It’s one of his plans to tackle high energy bills, and will be applicable to any solar panels, electric heat pumps and insulation installed in the next five years .
Solar Energy UK had been campaigning for the Government to ensure all solar and energy storage technologies qualify for zero-rated VAT. It believes this will encourage green home investments.
Kevin McCann, Policy Manager at Solar Energy UK explains. ‘We have also called on the government to work with the solar and other low-carbon technology industries to establish a long-term retrofit support scheme for homeowners and renters. All zero-carbon technologies should have access to these support measures, including solar PV, solar thermal, energy storage and zero-carbon heat technologies.’
Image credit: iStock/Callum Redgrave-Close
Is the Feed-in-Tariff still available?
The Feed-in-Tariff used to pay homeowners to generate electricity from their solar PV panels. Unfortunately, it closed on 31 March 2019 for all new applications.
Is the Green Homes Grant still available?
The short-lived Green Homes Grant offered homeowners up to £10,000 to make energy-efficient improvements. Solar thermal panels were included as a primary measure, but the scheme was scrapped in March 2021.
A local authority-delivered scheme has continued to provide funding for solar PV panels. It’s open to households with an EPC rating of D, E, F or G and a combined annual income of below £30,000.
How else can I recoup money on my solar panels?
If you had solar panels installed on the Feed-in-Tariff then you might be able to sell this tariff, a process known as solar equity release. Some energy suppliers will offer lump sums to homeowners in exchange for the remainder of the tariff, and for your excess generation. If you go down this route it’s best to shop around for the best deals.
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