Solar panel grants. A set of solar panels installed on the roof of a house with blue sky above.

Image credit: kalhh/Pixabay

Rising energy bills were a hot topic in the UK last year, and with the Government’s Energy Price Guarantee increasing to £3,000 in April, there doesn’t appear to be an end in sight to hefty costs. As a result, enquiries for solar panels have skyrocketed as homeowners look for ways to reduce their energy bills and their carbon footprint. But with the average 3.5kW system in the UK costing around £5,500, some are looking for solar panel grants to save money on the initial investment.

The good news is there are a number of schemes available to help with the cost of installing solar panels, including government grants, low-cost financing and even ways to earn money by selling any excess energy produced by your system. In this article, we’ll examine each of these schemes to help you determine if you’re eligible.

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Smart Export Guarantee (SEG) Scheme

Introduced in January 2020, the Smart Export Guarantee (SEG) is a scheme that allows small-scale energy providers, such as homeowners, to receive payments for the electricity they supply to the National Grid. The UK Government implemented the SEG initiative to replace the previous Feed-in Tariff scheme.

Whereas the Government provided payments under the previous Feed-in Tariff scheme, with the SEG these are made by private energy companies. Those with over 150,000 consumers are required by law to offer an export tariff rate, which varies based on the provider. Based on our research, the export tariff rate can be 1p-15p/kWh of electricity exported. Additionally, some energy suppliers provide a special tariff rate for energy exported from specific solar battery storage systems.

Who is eligible for the SEG scheme?

The SEG scheme is available to any household with solar panels (up to 5MW) installed by a Microgeneration Certification Scheme (MCS)-accredited contractor. The solar panel system needs to be installed with a smart meter to measure the amount of electricity exported to the National Grid. 

How do I apply for the SEG scheme?

Firstly, you will need to install an efficient solar panel system that can power your home and produce excess power to export to the National Grid. 

Then, you must apply for an SEG License. You can obtain this from any energy provider that offers an SEG tariff (also known as an SEG Licensee). You can choose your SEG Licensee and it can be different from your current electricity provider. By law, SEG Licensees must provide an SEG export tariff rate to eligible households. This tariff rate should always be above zero.

Each SEG Licensee offers its own export tariff rate and has different application processes. So be sure to check which one provides the best rates and suits your solar panel system. Keep in mind that some providers offer different rates for customers and non-customers, meaning they might pay more for your solar energy if they already supply your mains electricity. 

How much can I earn from the SEG scheme?

Your earning potential under the SEG scheme depends on several factors, such as the SEG export tariff, the amount of energy you export and your power consumption. 

According to the Energy Saving Trust calculator, a household with a 4kW solar panel system in London, where the occupants are away until 6pm on weekdays, can earn approximately £152/year for their extra energy under the SEG scheme (with an export tariff rate of 5p/kWh). This is on top of the roughly £205 saved per year in electricity bills by using solar power.

Benefits and drawbacks of the SEG scheme

A major benefit of the SEG scheme is that energy providers determine their own tariff rates, creating competition between them to maximise their individual exports. This translates into higher repayment rates for you. 

Another advantage of the SEG scheme is that you’re compensated for every unit of energy you export, unlike the previous Feed-in Tariff scheme, which compensated homeowners for only 50% of the energy exported to the National Grid.

A drawback of the SEG scheme is that the tariff rates provided by energy providers can change over time. Typically, SEG Licensees offer a 12-month rolling contract. So, be sure to check the rates regularly and switch providers (if needed) to get the most value for the energy you export.

0% VAT on energy-efficient technology

Solar panel grants. An aerial overhead view of a set of solar panels installed on the grey roof of a large building.

Solar panels qualify for 0% VAT until March 2027, which shaves some of the cost off the investment. (Image credit: Charlie Wilde/Pixabay)

To encourage homes to use more energy-efficient technologies, the VAT on energy-efficient equipment was reduced from 5% to 0% from April 2022 until March 2027. The impact of this VAT reduction could save you anywhere between £250 and £1,000 in solar panel installation costs. This rate also applies to other energy-efficient home improvement technologies such as heat pumps, biomass boilers and insulation.

Who is eligible for the 0% VAT rate?

To be eligible for the 0% VAT rate, you must purchase the product and carry out the installation with the same company. Also, you can add items to your system, but most of the work must be for energy-efficient technologies.

How do I apply for the 0% VAT rate?

Your installer will automatically apply the 0% VAT if the installation and energy-saving component qualify. As a result, there is no application process required.

Energy Company Obligation (ECO4) scheme

ECO4 is the newest phase of a UK Government programme designed to help low-income households increase their energy efficiency and reduce carbon emissions. ECO4, the successor of ECO3, launched on the 1 April 2022 and runs until March 2026, with funding of £1 billion/year.

The programme allows certain households to request solar panel grants in the UK until 2026, giving you the chance for free solar panels as well as other home upgrades like heat pumps and boilers. Your energy supplier and unique situation will influence the extent of assistance you can expect.

According to estimates, households can expect a reduction in their energy bills of approximately £290/year through ECO4. The scheme aims to upgrade the energy efficiency rating to band C for around 450,000 homes.

Who is eligible for the ECO4 scheme?

Low-income, fuel-poor and disadvantaged households receiving benefits are encouraged to participate in the ECO4 initiative. Your circumstances must meet specific criteria to qualify for solar panels:

  • You are a property owner, landlord or independent tenant.
  • You are receiving government benefits associated with your income or family situation (eg Child Tax Credits or Jobseekers Allowance).
  • Your household operates with an inefficient heating system within the D-G energy efficiency range.
  • Your residence is entirely electric (both on and off-gas), with no provision to connect to the District Heat Network or install a biomass boiler.

Suppose you are considered low-income but do not receive government benefits. In that case, you may still be eligible for the ECO4 scheme under the ECO4 LA Flex programme, which we’ll discuss later in this article.

How do I apply for the ECO4 scheme?

To apply for the ECO4 scheme, you can contact your energy provider, who will discuss your home’s energy efficiency rating and heating needs. You can also fill out the ECO4 eligibility form. Once your eligibility is confirmed, you can schedule a date for a surveyor to visit your home for an inspection. During the inspection, the surveyor will assess if your home is eligible for the ECO4 scheme and solar panels.

The LA Flex scheme

The Local Authority Flexible Eligibility (LA Flex) scheme is an extension of the ECO4 scheme. It was adopted to improve access for many UK homeowners who were previously ineligible for energy-efficient technology funding under ECO3.

The LA Flex scheme expands the eligibility requirements for energy-efficient technology funding to local authorities and councils. It’s a new route to ECO4 funding, with comparable metrics but varying eligibility criteria. Those that meet the requirements can get funding for energy-efficient equipment such as solar panels.

Who is eligible for the LA Flex scheme?

The LA Flex scheme applies to fuel-poor households and households most vulnerable to cold weather. Fuel-poor households are classified as households that spend 10% or more of their net income on heating bills.

Generally, there are three routes to acquire solar panel funding under the LA Flex scheme, which are provided below. However, local authorities set their own eligibility criteria. The best way to check your eligibility is by contacting your local authority or completing the online eligibility form.

  • Route 1: Your annual household income is under £31,000.
  • Route 2: You or a family member suffer from illness exacerbated by cold climates, such as respiratory or cardiovascular diseases.
  • Route 3: Your home has an energy efficiency rating between E and G and you meet any two of the following requirements:
    • Your house is in the Lower-layer super output (LSOA) 1-3 area.
    • You receive a Council Tax rebate based on low income only.
    • As identified in the National Institute for Health and Care Excellence (NICE) guidance, you or a resident are sensitive to living in cold climates.
    • The Local Authority Delivery (LAD) scheme has referred you.
    • Your family is provided with free lunches at school.
    • Your mortgage lender, your energy provider or Citizens Advice has urged your household to seek assistance from the local authorities due to mortgage payments and utility bill debts.

How do I apply for the LA Flex scheme?

You can apply for the LA Flex scheme by contacting your local authority or completing the online eligibility form. The local authority will then instruct you to schedule an appointment for a surveyor to visit your home to inspect the energy efficiency and confirm what technology you could benefit from.

The Green Deal

The Green Deal was initially a 2013-2015 UK Government programme that granted loans to households to help them implement more energy-efficient devices. This scheme has now been relaunched by private investors.

Who is eligible for The Green Deal scheme?

To be eligible for the Green Deal scheme, your house needs to have an electricity or prepayment meter. If you’re a tenant, you can apply for the scheme with your landlord’s agreement. The loan provided is fixed to the property and transferred to the new owner in the event the property is sold. The loan payments are invoiced as an extra fee on your energy bills.

How do I apply for The Green Deal scheme?

To apply, you need to get your household inspected by a certified Green Deal surveyor. These providers and surveyors have a quality mark, which is a greenhouse with a tick on the roof. The report provided by the surveyor will address whether the installation of energy-efficient devices will reduce energy costs and how much you could save.

Are solar panels worth it?

Solar panel grants. A close-up of solar panels with the sun shining on them and blue skies with a few white clouds.

Solar panels are becoming an attractive investment due to the rise in energy prices. (Image credit: andreas160578/Pixabay)

We’ve covered the key details of solar panel grants in the UK, but are solar panels themselves worth it? Let’s take a look at the benefits they provide.

  1. Lower energy bills

    Your energy expenses will decrease with solar panels because you’ll be generating your own electricity, which will help you fight the rising energy prices. Utilising a solar battery can further reduce your expenses by allowing you to use stored excess power at night.

  2. Get paid to export your excess electricity

    You can get paid to supply your excess energy to the National Grid through programmes like the SEG. The rate will vary depending on your energy provider, but a typical household can earn approximately £100 a year.

  3. Simple to maintain

    Solar panels need minimal maintenance and must only be inspected and washed twice a year to ensure optimal performance. You should clean your solar panels more regularly if you live in an area prone to high pollution or bad weather. In the long term, your solar panels are protected by warranties ranging from 12 to 40 years.

  4. Improves sustainability

    Solar panels provide eco-friendly energy by converting sunlight into electricity. Solar panels will reduce your reliance on high-pollution fossil fuels for power, thus making your home more sustainable.

  5. Less reliance on National Grid

    Solar panels offer an effective and affordable option for remote or rural areas where linking to the national power grid network would be expensive.

    You can also install solar batteries with your solar panel system. Solar batteries store the extra electricity generated by your solar panels, ready for use overnight or on very cloudy days.

Frequently Asked Questions

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