With the variety of solar panel grants available, there has never been a better time to add solar panels to your property. The technology underpinning this energy source has been steadily improving over the past decade, making them a viable way for homeowners to provide their homes with clean, sustainable energy, all the while significantly reducing the cost of their energy bills.
Plus, with a range of government-backed solar panel grants available, the cost of installing solar panels has never been lower than it is right now.
In this post, we’re going to run through everything you need to know about the solar panel funding options available to you in 2024.
All About Solar Panels
You’ll have heard of solar panels. After all, they’ve been around for a long time. The concept dates back to the 1930s, while commercial solar panels have been available in the UK since the mid-1980s.
Interest and adoption of solar panels, particularly in a home environment, has accelerated in the past couple of decades, and particularly in the past ten years. And it’s not hard to see why that’s the case — after all, solar panels help overcome many of the problems of traditional energy sources, most notably, the impact on the environment and the homeowners’ bank balance. Solar panels produce clean, renewable energy, and can reduce electricity bills by up to 62%.
Understanding Solar Panel Funding
Solar panels are an effective way for homeowners to enjoy clean, cheaper energy. However, there is a catch — installation of solar panels is expensive and, for that reason, many property owners have shied away from going through the installation process. The market value of adding solar panels stands at around £6,000 – 10,000, depending on the size of the property. The return on investment of that sum is around 7 – 10 years.
Solar panel funding exists to encourage UK homeowners to add solar panels to their properties. The UK has ambitious plans to reduce its dependence on fossil fuel energy, hoping to reach net zero by 2050, and residential solar panel adoption will play a big role in making that a reality. If you’re an experienced electrician, now is a good time to complete our solar panel installation course.
To help achieve its ambitious energy goals, the UK has invested millions into initiatives that help to lessen the financial burden on homeowners wishing to install solar panels. Below, we’ll take a look at the funding that’s available.
Solar Panel Grants: What’s Available?
There are a host of solar panel funding options available to UK homeowners, though it’s important to note that the majority of them have set criteria that limit eligibility. Some solar panel grants are designed to reduce the cost of solar panel installation, while others eliminate the cost altogether.
You’ll need to know which solar panel grants you’re eligible for before applying. With that in mind, we’ve put together a list of the solar panel grants and funding options available in the UK in 2024.
0% VAT
You’ll usually pay 20% in VAT on goods and services purchased in the UK. In an attempt to encourage energy-saving practices, the UK reduced the VAT level to 5% for all qualifying products and services that enhanced energy efficiency.
Since 2022, that reduced VAT rate has been reduced even further. Today, UK homeowners pay 0% VAT on the cost of solar panels and installation. That’ll come to an end in March 2027, making now an excellent time for UK homeowners to add solar panels to their properties.
The value of a 0% VAT rate is easily evidenced when compared with the costs of installing solar panels at the standard 20% rate. Homeowners can save between £1,500 – £2,500 for a 3kW system, all the way up to £3,900 – £4,200 for a 6kW system.
Most residential homeowners qualify for the reduced VAT rate. The main requirement is that the purchase of the solar panels and the installation must be carried out at the same time (as in, you can’t buy solar panels at 0% VAT and install them at a later date).
You won’t have to do anything to get the 0% rate; the installer of the solar panels will take care of it.
Energy Company Obligation 4 (ECO4)
The Energy Company Obligation 4 (ECO4) initiative is an update of ECO3. In place since April 2022, ECO4 aims to make it significantly cheaper for low-income households to add solar panels to their properties. In some instances, the initiative provides solar panels and installation entirely free of charge.
ECO4 exists to improve energy efficiency and reduce the environmental impact of homes across the UK, particularly the least efficient homes. Eligibility is largely determined by the income of the household and the energy efficiency band it falls into.
You may be eligible for free solar panels if you:
- Have a household income under £31,000.
- Own and live in your property (private renters also qualify, though you’ll need to get permission from the landlord).
- Receive government benefits (such as income support).
- Have a heating system between the D-G energy bands.
You’ll need to apply for ECO4 funding. This is usually carried out by a telephone interview and on-site visit from a solar panel installer.
LA Flex Scheme
The ECO4 scheme is a national scheme with strict criteria. The LA Flex (Local Authority Flexible Eligibility) scheme is an extension of ECO4, which gives local authorities the option to grant funding to homeowners who do not qualify for ECO4.
Since the LA Flex scheme is entirely in the hands of local authorities, it’s not possible to summarise which homeowners are eligible. To learn more, it’s best to get in contact with your local authority.
Some examples where a homeowner might qualify for LA Flex funding include:
- Many people live in the home.
- The home is in poor condition.
- It’s a low-income household.
- The home contains vulnerable people (for example, the elderly).
The LA Flex initiative greatly increases the number of people throughout the UK who qualify for solar panel funding.
Home Upgrade Grant
The Home Upgrade Grant is currently in its second phase. HUG2 has been in place since April 2023 and will run through March 2025, at which point applications will no longer be accepted. This initiative is designed to help low-income families (annual income of under £39,000) living in off-grid properties or properties with low energy efficiency afford renewable and energy-efficient home upgrades.
Not all local councils offer the HUG2 scheme, but most do. You’ll make the application to them directly, at which point they’ll consult a site visit to check that you’re eligible for the scheme. Grants of up to £10,000 are awarded for solar panels and other home improvements that boost energy efficiency.
Home Energy Scotland Grant and Loan
New applications for a Home Energy Scotland Grant and Loan are currently closed, but if you’ve already submitted an application, then it’ll continue to be processed as normal. This scheme is available to all Scottish homeowners, providing interest-free loans or grants to help homeowners make energy-efficient upgrades to their properties.
Funding can be used for a wide range of solar panel-related upgrades, including:
- Up to £6,000 for solar panels (£1,250 in grant money, up to £4,750 in loans).
- Up to £5,000 in interest-free loans for solar water heating systems.
- Up to £5,000 in interest-free loans for hybrid solar panel/water heating systems.
- Up to £6,000 for solar power storage systems (£1,250 in grant money, up to £4,750 in loans).
Welsh Government Warm Homes Nest Scheme
Homeowners in Wales can receive free advice and energy-efficient home upgrades as part of the Welsh Government Warm Homes Nest Scheme. A range of energy-efficiency upgrades are available, including solar panel installation. To qualify for free solar panels, you’ll need:
- Have a home with poor energy efficiency that results in high energy bills.
- Receive means-tested benefits or have certain health conditions
- To own or rent the property.
Who Can Get Solar Panel Funding?
Some solar panel cost savings are available to all UK residents; for instance, the 0% VAT Scheme. Others, such as ECO4, are generally reserved for low-income households who otherwise would struggle to pay for solar panels and installation.
Alternative Ways to Fund Solar Panel Installation
We’ve mentioned a host of government-led initiatives that help UK homeowners add solar panels to their properties, but there are other options available. For one thing, many homeowners may find that they can afford the installation themselves, especially since the cost of solar panels has decreased significantly in recent years. There are also schemes run by private companies and organisations, including the Barclays Greener Home Reward, which offers savings of up to £1,000. The Sunsave Plus subscription scheme allows UK homeowners to pay for their solar installation in instalments.
The Benefits of Installing Solar Panels
It takes time and effort to install solar panels on a property. And though there’s funding available, it’s likely that most homeowners will have to pay something for the materials and installation. Still, there are plenty of good reasons to do so, as seen by the sheer number of UK homeowners who have undergone the process. According to the latest government statistics, some 1.39 million homes — nearly 5% of UK homes — have solar panels, and that figure is rising year on year.
If you’re still unsure whether it’s worthwhile installing solar panels at your property, then take a read below, where we’ll outline just some of the benefits of adding them to your home.
It’s Good For The Environment
It’s becoming increasingly clear that our energy consumption levels are unsustainable. As such, it’s imperative that we all find ways to limit our impact on the natural world. Solar panels provide clean, renewable energy, which helps to dramatically decrease a household’s carbon footprint.
With UK homeowners increasingly searching for ways to limit their environmental impact and do their bit to tackle climate change, solar panels provide an outstandingly efficient way to enhance a home’s eco-credentials. While other energy-saving measures — such as turning off lights — can be effective, solar panels provide an entirely different level of efficiency and eco-goodness.
They Can Save Households Money
With costs of living rising all the time, more households than ever are looking for ways to reduce their household expenses. While even with government funding there’s often an upfront cost to installing solar panels, they can pay for themselves in the long run. Depending on the capabilities of the solar panels you install, you may find that you save up to £1,000 on your energy bills each year, with the average being around £500 a year.
In addition to saving money on direct energy costs, homeowners may also make additional money by selling excess energy to the grind. That approach can bring in around £200-300 a year.
Solar Panels Are Reliable
Even homes that have solar panels are connected to the grid. During periods when the grid is offline, solar panels can provide a vital and reliable source of energy. Modern solar panel systems can store the energy that they produce, which means it’s possible to use solar power-driven energy during the night. If the grid in your area is facing difficulties, you’ll have peace of mind knowing that you can still access the electricity that you need.
Plus, modern solar panels are made of components that rarely break, and they usually come with long warranties, too. It’s not uncommon to find solar panels that come with a 25-year warranty.
They Increase Property Value
UK homeowners are increasingly interested in having solar panels on their property. However, not all homeowners are willing to undertake the time and effort required to add them to their properties. Studies have shown that prospective home buyers are willing to pay more for properties that already have fully working solar panel systems installed. Some studies indicate that solar panels can increase home value by up to 5%, especially if you live in an area that has seen a sharp increase in energy bills in recent years.
While it’s not recommended to install solar panels solely to increase the value of your home, it can serve as a nice bonus should you decide to one day sell.
They’re Easy to Maintain
Though they use advanced technology, solar panels have proven to be remarkably robust, requiring little maintenance even over long periods of time. Since there are no moving pieces and they don’t require any fuel whatsoever, homeowners can expect their solar panels to stay in tip-top condition for years.
The only maintenance they require is a little bit of cleaning every six months or so. To clean your solar panels, simply use a dedicated solar panel cleaning product or an outdoor glass cleaner with a gentle cloth. If you have a more serious issue with your solar panels, it should be straightforward to find a solar panel repair expert in your local area.
It Can Help The Wider Community
It may be possible to sell back excess energy that your solar panels produce back to the grid. As well as helping to further offset the costs of installing solar panels at your property, this approach also helps to benefit the wider community to which you belong. By providing your area with clean, renewable energy, you’ll be doing your part to lessen the area’s reliance on fossil fuels, which can have long-term benefits for the local area.
Plus, by going through the process of adding solar panels to your home, you can inspire other homeowners to do the same. More people are likely to install solar panels if, first, they see that their neighbours have done so, and second, if they’re aware of the benefits of solar panel installation. By sharing information on the amount of money you’ve saved on energy bills, how to get government solar panel funding, and the installation process, you might just encourage many people in your community to get solar panels.
The Downsides of Installing Solar Panels
As we’ve just seen, there are a lot of advantages to adding solar panels to your property. However, as with all things, it’s important to remember that solar panels aren’t perfect. They come with their own disadvantages that homeowners should be aware of before they go through the installation process.
Can Be Expensive
Most homeowners are on board with the lowered energy bills that they would get as a result of installing solar panels. But none are quite as enthusiastic about the outlay of money that’s required to add solar panels. While it’s possible to get solar panels for free under the UK government’s solar panel grants, that option is generally only available to low-income households. Even though savings are available for other homeowners, the cost of buying and installing solar panels can still be significant.
However, these costs usually repay themselves within a few years after installation.
Solar Energy Is Challenging to Store
While solar panels have proven to be effective at generating electricity, storing that energy can be challenging. Not all solar panel systems are equipped with industry-leading storage batteries, and even with those, there’s usually an upper limit to how much energy they can store.
You can buy solar panel storage batteries and add them to an existing solar panel system. However, they tend to be expensive and generally don’t last as long as solar panels, which means they’ll need to be replaced at some point. They are, however, effective, and can repay themselves relatively quickly, especially during periods when energy prices are high. In addition, you’ll currently pay no VAT on solar panel batteries, which can help reduce the cost.
You’ll Need to Have Enough Space
You’ll need to have adequate space to install the solar panels. In instances where multiple solar panels are required to meet the home’s energy requirements, that may not be possible. For the standard 4kW solar panel system, you’ll need to have twenty square metres of roof space. If you’re unsure whether the layout of your roof is appropriate for solar panels, it’s best to speak to a professional. Even if you don’t have the space for a full solar panel installation, you may be able to install smaller systems that can still offer some of the benefits of solar panel systems, including energy cost savings.
They Can Decrease Home Value
We mentioned above how adding solar panels to your property can help to increase property value. As a general rule, that is correct. However, there are instances when solar panels may have a small negative impact on a property’s valuation, or at least won’t add enough to justify the cost of installation. For instance, potential homebuyers in areas that do not receive much sunlight may not fully recognise the benefits of solar panels. It may also not add value if solar panels are out of sync with homes in the surrounding area.
Effectiveness Dips During Non-Sunlight Days
Modern solar panels can generate electricity even on cloudy days. However, they work best on bright and sunny days. If you live in an area that doesn’t receive much direct sunlight, then you’ll likely still be reliant on the grid system for your electricity.
Are Solar Panels Right For You?
The UK government is investing millions of pounds to help UK homeowners install solar panels at their properties. These schemes won’t last forever, with many due to come to an end in the next few years. As such, now’s the time for homeowners to think about whether they want to add solar panels to their properties.
Given the potential benefits that installing solar panels can offer, they’re generally seen as a good investment of time, effort, and money. Plus, if you qualify for one of the many solar panel grants that are available in the UK, you can help to keep the cost of solar panel installation down to a minimum.
The Bottom Line On Solar Panel Grants in the UK
There has never been a better time to add solar panels to your property. With more and more concern growing about the effects of climate change, installing solar panels on your property can be a highly effective way to lessen the size of your carbon footprint while also saving money on your energy bills.
If you’re ready to get started with the installation process, then we encourage you to get a free quote for solar panel installations. Many installers will also provide additional information about how you can apply for the UK’s solar panel funding.
Solar Panel Funding: FAQ
Still have questions about how solar panel funding works in the UK? We’ve put together a handy solar panel FAQ list that should answer your query. If your answer isn’t answered here, then it’s recommended to speak with a solar panel installation company.
Can I Get Free Solar Panels In the UK?
You can get free solar panels in the UK, but most people have to pay something. You can get free solar panels if you meet specific criteria as set out by the conditions of the ECO4 Scheme. Welsh homeowners can also qualify for free solar panels under the Welsh Government Warm Homes Nest Scheme. Even if you can’t get free solar panels, the wide range of solar panel funding initiatives means that it’s highly likely that you can save a significant sum of money on parts and installation. For instance, UK homeowners currently benefit from 0% VAT on solar panels and installation and will do so through 2027.
Can I Make Money From My Solar Panel Energy?
Yes, you can make money from the energy that your solar panels produce by selling it back to the grid. If you don’t have a solar power storage battery, it is likely that your solar panels will produce more energy than you need, especially on bright and sunny days. You can use the Smart Export Guarantee scheme to sell your excess energy to the grid. Many homeowners find that they can earn £200 – 400 a year via this method, which helps to reduce the energy expenses even further.
Are UK Solar Panel Grants Still Available?
Yes, there are a number of UK solar panel grants available to homeowners, though eligibility for these grants varies. The most popular scheme is ECO4, which is designed to help low-income households make energy-boosting improvements to their properties. Some solar panel funding schemes have expired, such as the Green Homes Grant, which expired in March 2021.
Are UK Solar Panel Funding Options Changing?
There have been no announcements about any changes to the UK’s solar panel funding schemes. However, it’s anticipated that changes will be announced soon. The new Labour government promised to invest heavily in solar panels, so it’s expected that the number of solar panel grants will expand in the years to come and that it’ll be easier for homeowners to install solar panels in a cost-effective way.
