Solar Panel Grants and Government Schemes

Solar energy grants have been something of a hot potato in the UK of late, mostly because there is a great deal of confusion about what’s available and who can take advantage of the schemes.

If you see an advert promising totally ‘free’ solar or anything like that, it’s just clickbait or a scam.

In this blog we hope to make things a little clearer for you by investigating the legit ECO4 scheme, zero percent VAT, the and SEGs (Smart Export Guarantee) schemes.

We’ll also look at Barclay’s mortgage offer for a greener home. You can also find out about solar panel finance or get a quote for solar panels straight away. 

So, are there any grants available now?

Sort of, as we have 3 main ways of saving money on solar panels as of March 2023:

What is ECO4?

This scheme has had 3 previous incarnations, hence the name ECO4.

ECO3 closed on 31 March 2022 and ECO4 came into force in July 2022.

This government and energy supplier backed scheme is basically a 4-billion-pound pot of cash available to people in energy poor residences to help them power their homes and reduce the carbon emissions, generally, in the UK.

To qualify to apply you must either be referred by your energy company, be on certain benefits or be in a household with an annual income of less than £31,000.

If that’s you, you can apply for an ECO4 grant to make ‘green’ improvements to your home – from heat pumps and solar panels to storage heaters and loft insulation.

Are you eligible for ECO4?

You can see if you are eligible here but, broadly speaking you can apply if you:

• • Currently have heating powered by a system within the D to G energy efficiency band. 

• • Live in private rented accommodation or own your own home.

• • Live in an all-electric home where biomass boilers or a District Heat Network has been ruled out.

• • Are receiving government benefits like child benefits or income support.

Other ways to claim ECO4

Another way to gain access to this ‘grant’ is to use the ECO LA Flex, LADS, Local Authority Delivery scheme provided by your local authority.

Doing it though LA Flex means that you may be able to secure a grant even if you don’t meet all the criteria needed via ECO4. As the decision is made by your local authority they can assess your need in a much more one-to-one fashion.

The Flex element of ECO4 looks are personal circumstances, number of people in the home and at lowering EPC rating.

If you’re eligible you can get up to £10,000 to fund energy efficiency measures in a home you own or rent.

Eligible tenants in private or social housing can ask the landlords of those properties to apply for up to £5,000 towards the cost of Energy improvements, but the landlord may be required pay up to a third of the cost.

Learn more about ECO4 Funding.

SEGs – What is the Smart Export Guarantee?

The Smart Export Guarantee is most popular and available of all the ‘grants’.

It’s not a grant though, it’s a way to make a little extra cash by selling your excess electricity.

It was originally called a ‘Feed in Tarriff’ and the energy companies had to take your home generated energy – but that was a bit of a disaster, so it was relaunched in January 2020 as the SEG.

As the energy companies are not obliged to buy your excess energy anymore, it is much more affordable for them, and this scheme will continue for as long as the energy companies want to buy your electricity.

How do I set up an SEG?

First, you will need an MSC approved installation to qualify for an SEG, this ensures your system is compatible with the grid. Chances are it is, but energy companies won’t touch you unless that is confirmed by MSC approval.

If an energy company has more than 150,000 customers they have to, by law, offer an SEG scheme. If the company you use is offering a derisory amount for your excess electricity, you can bet they are just looking to comply with the law rather than pick up greener energy so you can expect any from 1p to 15p per kWh.

If you are looking to sign up to an SEG, Which? currently have Octopus Energy’s fixed rate as the best at 15p per kWh, though this is only open to Octopus customers.

Though, the average falls between 5p and 7p.

Companies are currently charging you 24.5p per kWh, so you are better off storing and using your excess energy.

0% VAT

Ok, I guess it’s stretching it a bit to call this a ‘grant’ as such, but it is saving you 5% – 20% on your installation price.

Due to the cost-of-living crisis, fuel scarcity, the war in Ukraine, less energy from the EU and many, many other reasons, the UK needs to become much more self-reliant when it comes to fuel.

One way to ensure that happens is encourage the public to adopt greener ways of living, especially at home,

So, in 2022, the spring statement from the government stated that:

‘For the next five years homeowners having materials like heat pumps, solar panels or insulation installed will no longer pay five per cent VAT they will pay zero.’

That counts as a 5% saving compared to the previous year but could mean a 20% saving if the VAT on renewable equipment is returned to its historic level in 2027.

It’s also worth remembering that’s only on new installs, if you buy panels, inverters or batteries, separate to an install, you will pay 20% VAT on anything you buy.

Home Energy Scotland Grant and Loan

Homeowners in Scotland can take advantage of the Home Energy Scotland Grant and Loan.

This government scheme offers grants of up to £7,500 and interest-free loans of up to £38,500 to people wanting to make their homes more energy efficient.

The grant is either £7,500, or £9,000 if you are in a rural area, and will cover up to 75% of the combined cost of home improvements.

However, it’s not a free for all on all things renewable as it doesn’t cover:   

• • Replacement heat pumps 

• • Wind or hydro turbines 

• • Warm air units 

• • Solar water heating systems 

• • Double or secondary glazing   

• • Insulated doors

• • Heat network connections

Which seems a bit restrictive, but the government’s own website says ‘if certain conditions are met’ you can get help towards PV systems, energy storage systems, biomass boilers/stoves, and high-heat-retention storage heaters.

The interest free loan comes in 2 flavours.

The first one is a loan of £15,000 to make energy-efficient improvements to your home.

On top of that you can borrow £17,500 for two renewable systems or connections to an approved renewable district heating system, AND a further £6,000 can be added for batteries or other energy storage.

You can pay the loans back over 12 years and you could be lucky enough to not have to pay the full amount back.

Barclay’s Greener Home Reward

If you currently have a mortgage with Barclay’s they may be able to help you invest in a solar energy system – they’ll actually give you cash.

They have extended the Greener Home Reward on their mortgage offers until 2024 – meaning you can register for the scheme before the end of next January and claim it before July 2024.

If you:

• • Already have a Barclay’s domestic mortgage

• • Are not in arrears

• • Have the work done by a TrustMark-registered business or tradesperson

• • Pay your mortgage by Direct Debit

• • Haven’t previously claimed

So long as you can tick all those boxes, Barclay’s will reward you with £1000 towards your Solar Installation or Battery.

Domestic RHI – Domestic Renewable Heat Incentive

This scheme was designed to help poorer households to heat their water, so wasn’t really the same as the electricity-based schemes.

It expired on 31 March 2022 to new applications and was replaced by the Boiler Upgrade Scheme – which helps energy poor homes install heat pumps and biomass boilers, rather than solar panels.

What energy grants or schemes are no longer available?

One of the reasons the solar grant water is so muddied is because of some of the schemes in the UK have been a bit disastrous.

Mostly due to the first attempt at encouraging households go green, also meant the energy companies had to pay quite a fair amount of money for any energy they bought from the customer, and they had to buy it all.

So, let’s look at some of the less successful schemes that have been ditched.

FIT or Feed-in Tariff

The Feed-in Tariff is what the SEG has replaced.

It was discontinued in 2019, meaning no one new could apply to the scheme, but if customers are already involved, they will continue to benefit.

Feed-in Tariff’s remit was to reward any household generating their own electricity by paying for every unit they produce – plus whatever they sold back to the grid.

Prices were set depending on the size of system, the technology involved and when it was installed. After registration, the customer was set up to receive payment for the next 20 years.

After a system had been installed by a certified installer, the customer could choose between being paid by their supplier or pick someone from a list of registered suppliers.

The tariffs were:

• • The Generation Tariff – this paid the customer for everything they generated and the prices ranged between 6.38p – 13.88p per kWh/h depending on the system.

• • The Export Tariff – this just included the excess electricity exported to the grid. This is currently set at 4.77p per unit.

Learn more about the Feed-in-tariff.

Free Solar Panel Scheme

This one was probably the scheme that turned the world of Solar into the wild west and wrecked the industry’s reputation – a reputation that we are still trying to rebuild.

Basically, a company would ‘rent’ your roof space and install a full solar system free of charge. In return they would take all the payments from FIT scheme.

The ‘customer’ would be able to use the electricity for their home and any excess would be sold and the installer would take the money for that.

Sounds great in principle but in practice the systems were shoddily fitted, with little regulation, and the homeowner would barely benefit as they would be using very little of the energy generated.

Now the industry is far more regulated this scheme has been stopped.