In the UK, you can receive a grant for solar panels to help reduce your energy bills by up to £1,000 annually or even a free solar PV panel system.

There are currently three funding options for solar panel installation for which you may qualify.

What solar panel grants will be available in 2022?

The Energy Company Obligation

Energy suppliers with over 150,000 customers must install energy-saving improvements to reduce home heating costs as part of the Energy Company Obligation, or ECO4 scheme.

They prioritise vulnerable and low-income households, helping those in fuel poverty who would otherwise struggle to afford solar panels. The programme, which started in 2013 and will run until March 2022 before being replaced by ECO4, will continue to offer solar panel grants.

If you receive certain benefits, you may qualify for ECO funding, but it is important to note that the eligibility requirements may change in April when ECO3 transitions to ECO4. The government’s Energy Company Obligation report contains the proposed eligibility criteria (opens in new tab).

You may also qualify if you receive the Warm Home Discount (which assists fuel-poor households) or your home has an (EPC) rating of D or lower. To be eligible, you must be a homeowner or have permission from your landlord.

Under ECO4, energy providers can select the amount of funding they provide and the installer who will perform the work. This means that while you could save approximately £6,000, the average solar panels cost. Your funding will depend on your eligibility and the effectiveness of installing solar panels in your home.

Check your EPC Rating

Energy Performance Certificates

An Energy Performance Certificate (EPC) tells you how energy-efficient a property is. It would be best if you had an EPC in England and Wales when you’re:

selling a property
renting out a property
building a new property

You must order an EPC for potential buyers and tenants before you market your property to sell or rent.

In Scotland, it is not compulsory to have an EPC rating though there is talk of legislation changing this in the future.

An EPC contains:

information about a property’s energy use and typical energy costs
steps to improve a property’s energy efficiency and save money

An EPC gives a property an energy efficiency rating from A (best) to G (worst) and is valid for 10 years.

Reduced value-added tax on energy-saving goods

0% VAT for Energy-Saving Materials. Beginning in April 2022, there will be no VAT on the materials and installation of energy-efficient measures in British homes. The VAT-free period will end after five years, and the rate will return to 5%. Combining solar panel grants and the value-added tax elimination brings homeowners closer to adopting renewable energy sources.

Advantages of 0% VAT

The VAT on renewables was already low at 5%, but its elimination will enable the average family with rooftop solar panels to save over £1,000 on installation and £300 per year on energy bills. In addition to solar panels, the 0% VAT applies to other energy-saving materials, such as heat pumps, biomass boilers, insulation, and more.

Eligibility

The permanent elimination of specific eligibility criteria previously applied to the 5% reduced rate is a welcome addition to the new zero VAT rules. For additional information, please visit the government’s website. To be eligible for a 0% VAT rate, your home and new installation must satisfy the following conditions:

Must include the installation and product that must be performed concurrently.
Other goods/services (such as insulation) can be installed concurrently, but most of the work must be for energy-saving materials.

The Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG), which went into effect in 2020 to replace the Feed-in-Tariff, requires energy suppliers with 150,000 or more customers to compensate homeowners for excess solar-generated electricity. This necessitates the installation of solar PV panels, but an SEG tariff can still save you money on your electricity bill. Installed solar PV panels with MCS certification may be eligible. However, you will also be required to install a smart meter that records your exported electricity.

With the SEG, the question is, “how much could I earn?” Depending on variables such as your electricity consumption and export tariff rates, Which? Estimates that households with the highest SEG rate could save £82 annually. James Andrews, Senior Personal Finance Editor at Money.co.uk, states, “People may not like the idea of solar panels because they believe that the UK’s frequently cloudy skies will not generate enough energy.” Even on cloudy days, solar panels continue to produce electricity.

“This is a fantastic development, as the Smart Export Guarantee allows households to be compensated for their solar energy output. This may not be as generous as the feed-in tariff programme it replaced, but it prevents energy from being wholly wasted. If you are considering solar panels to reduce your annual energy bills, a UK solar panels grant may be for you.”

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