How Much You Can Save With Solar Panels

How Much You Can Save With Solar Panels

All Solar Panel Grants and Schemes in the UK 2023

In this article we’ll answer the perennial question asked year after year – are solar panels worth it in the UK in 2022? This year the answer is a whopping yes because of the viability of the ECO4 (Energy Company Obligation Scheme).

Benefits:

✔ Solar panels can help reduce your bills by up to 70%

✔ With the ECO4 scheme, the least energy-efficient homes can save up to £1,600 annually!

✔ This is the right time + Switching to solar and utilising grants will help you save energy bills for the typical household will rise by £1,578 a year starting October 2022!

Through the ECO4 Scheme, the government allocated £4 billion towards the installation of solar panels and heat pumps across the UK. The government is also letting councils decide what the eligibility criteria will be depending on the needs and specific circumstances of people in the area.

This is a big win, since previously, many people who needed grants didn’t meet the narrow criteria set out. What’s notable about ECO4 is that eligibility isn’t just limited to household income or people on benefits, but can expand to accommodate age and health of residents, number of people in the house, condition of the home, etc.

So, between 2022-2026, there’s a much greater chance of actually getting a solar panel grant. This is bolstered by the fact that Chancellor Rishi Sunak announced in March 2022, amidst the energy price crisis, that the VAT for solar panels has gone down to 0% for a 5-year period!

Latest news: VAT on solar panels is scrapped until 2027!

In April 2022, Europe witnessed energy prices driving inflation to numbers that haven’t been seen in more than 40 years! And more than 40% of this inflation increase comes from energy prices.

To help households reduce energy bills and increase energy efficiency, the UK government announced a reduction of the current 5% VAT relief on energy-saving measures (e.g. solar panels, heat pumps) to 0%. According to the UK Government, a typical household with rooftop solar panels will save more than £1,000 in total installation costs, in addition to £300 in yearly energy expenses.

In March 2027, the VAT-free period will end, and the rate will return to 5%. If you want to get a head start before it ends, you can begin by comparing solar panel prices to save you the most money.

Learn More in Our Guide

  • What Solar Panel Funding is Available in the UK?
  • ECO4 Scheme
  • Smart Export Guarantee
  • Reduced VAT for Energy-Saving Products
  • Recently Expired: Domestic RHI
  • Recently Expired: Feed-In Tariff (FIT)
  • Recently Expired: Free Solar Panel Scheme
  • Is UK Solar Panel Funding Legitimate?
  • Frequently Asked Questions

What Solar Panel Funding is Available in the UK?

Promoting the use of renewable energy sources has been on the UK government’s agenda for many years now. The EU’s Renewable Energy Directive set out for all member countries to reach a 32% renewables target before 2030. The UK has been working towards that goal, as the focus is to move in this direction by introducing more schemes and incentives in the renewable energy sector.

This tendency was accompanied by a decrease in the cost of solar panels, so new buyers do not need to worry. Though there aren’t any grants in the traditional sense, there are opportunities for solar panel funding in the UK. Currently, the only scheme open to new applications is the Smart Export Guarantee (SEG).

Overall, there are six notable incentives for solar panels in the UK that will be covered in this guide:

UK Solar GrantsRun TimePotential Savings
Energy Company Obligation 4 (ECO4)April 1st 2022 – March 2026Partially or fully FREE solar panel possibility
Smart Export Guarantee (SEG)January 1st 2020 – (indefinite)1 – 7.5p per kWh
0% VATApril 1 2022 – March 2027£1,300+ on installation & energy bills
Renewable Heat Incentive (RHI)Expired March 31st 2022!Up to £2,981
Feed-in Tariff2010 – 2019 (Expired)(Those registered will continue to benefit)Generation Tariff – 6.38 – 13.88p per kWhExport Tariff – 4.77p per unit
Free Solar Panel SchemeExpired March 2019Fully free solar panel system (£5,000-£11,000)

Available solar panel grants in the UK as of September 2022

ECO4 Scheme

ECO4 (Energy Company Obligation) replaced ECO3 from 1st April 2022 and will run until March 2026. The government has allocated 4 billion pounds– it spreads 1 billion across 4 years– to improve the energy ratings of UK homes and reduce carbon emissions. ECO4 is distinct from ECO3 in that more people will have the chance to qualify because of LA Flex or flexible eligibility.

The scheme came into effect on 27 July 2022, but ECO4 can be applied to eligible measures installed from 1 April 2022 to March 2026.

Benefits of ECO4 Scheme

ECO4 allows low-income households the opportunity to replace their inefficient heating system with a more efficient and environmentally friendly system, such as solar PV panels.

The ECO4 is estimated to upgrade approximately 450,000 homes, mostly to EPC band C. Qualified households will reduce the average household energy bills by around £290. But for the least efficient homes, this could save as much as £1,600 annually.

Eligibility

The ECO4 scheme is open to low-income, fuel-poor and vulnerable households receiving benefits. To be eligible for solar PV panels, your home needs to meet specific requirements:

  • currently have an inefficient heating system within the D-G energy efficiency band.
  • own your home and live in it, or live in private rented accommodation.
  • all-electric homes (on and off-gas) where biomass boilers or District Heat Network has been ruled out
  • receiving government benefits (e.g. child benefits or income support)

If you are currently not receiving benefits but are considered low-income, you may still qualify for ECO4 under the ECO4 LA Flex.

LA Flex gives councils the flexibility to determine eligibility criteria in their region — criteria are no longer limited to availing benefits or even based on income and will be tailored to the circumstances of people in the area (e.g., age, number of occupants, number of children, condition of the house, etc.). This means that more people in the UK will be able to get solar panel grants.

How to Apply for ECO4 Scheme

If you’re interested in the ECO4 scheme and want to apply to it, all you need to do is contact a participating energy supply. They will then conduct a telephone assessment by asking you questions about your home and your heating needs. Then you can arrange a date for an installer to visit your home to confirm whether it’s suitable for ECO4 and which energy-efficient measure would be best suited.

Before moving on to the rest of the available grants in the UK, it’s important to mention that the key to maximising savings through solar panel funding is choosing the right panels. You don’t want to apply grants to sub-par panels or panels that aren’t the right fit for your home.

The right panels are tailormade to the energy-saving needs and specificities of your home for maximum efficiency. Tailormade panels can slash annual UK energy bills by over 70%!

Maximise savings through grants by comparing up to 4 tailormade solar systems available near you. Just select your region

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Scotland

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Northern Ireland

Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG) came into effect on 1 January 2020 and is currently active. It enables small-scale low-carbon electricity generators to receive payments for any surplus energy they export back to the grid.

Although this is not a direct government grant, all licensed suppliers must now offer an export tariff to their customers. Those suppliers with over 150,000 customers are obligated to offer a tariff, while those with fewer can partake voluntarily.

This incentive makes solar panels a great type of green home improvement project.

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Benefits of Smart Export Guarantee

As an SEG Generator, you can shop around for different SEG Licensees to see who offers the best price per kWh that is exported. You can determine the contract length and rate for which they offer. Generally, the rate will range between 1p and 7.5p per kWh. Because you can choose any SEG Licensee, even one that’s different from your electricity supplier, shopping around for the best rate will get you the best deal.

Based on a 7.5p per kWh rate, the average owner of a three-bedroom home with a 3.5 kWp solar panel installation will currently earn £112 per year under SEG.

Eligibility

All homeowners with regular solar panel systems (up to 5MW capacity) are eligible under the SEG. In addition, the house must be fitted with a smart metre, in order to measure the exports. Some energy suppliers also offer only special rates for energy exported from specific solar battery storage systems.

How to Apply for Smart Export Guarantee

To be an SEG Generator, you will need to shop around for an SEG Licensee (an electricity supplier authorised to offer an SEG tariff) and apply directly to them. All SEG Licensees are obliged to offer an SEG tariff to all eligible generators. However, each one will have its own specific application process that you will need to follow up on.

Before you can start applying for SEG tariffs, you need to first lock in an energy-efficient and tailormade panel that’s suited to your home’s needs. This will ensure you are saving at the start itself since you don’t want to apply grants to panels that are sub-par or not a fit for your home.

GreenMatch can save you the time and effort it takes to find the best deals for solar panels tailored to your household and home. Instead of calling multiple installers to explain your heating system situation, you can spend the time preparing to apply solar panel grants and benefits to your newly installed solar system.

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Reduced VAT for Energy-Saving Products

Starting April 2022, homes in the UK can now benefit from zero VAT on the materials and installation of energy-efficient measures.

After five years, the VAT-free period will end, and the rate will return to 5%. So, the combination of solar panel grants plus the scrapping of the VAT brings homeowners closer now more than ever to achieving renewable energy sources.

Benefits of 0% VAT

The VAT on renewables was 5%, which was already low, but scrapping it will see the typical family with rooftop solar panels saving more than £1,000 on installation and £300 annually on their energy bills.

The 0% VAT also applies to other energy-saving materials, besides solar panels, such as heat pumps, biomass boilers, insulation, and more.

Eligibility

The new zero VAT rules also welcome the permanent removal of specific eligibility criteria that previously applied to the 5% reduced rate. You can read about this on the government’s website for the full details.

To be eligible, your home and new installation need to meet some specific requirements to benefit from a 0% VAT rate:

  • must include both the installation and product that need to be done together
  • you can also install other goods/services (e.g. insulation) at the same time, but the primary bulk of the work must be for the energy-saving materials

How to Apply for 0% VAT

If the installation and energy-saving material qualifies, then the 0% VAT will be automatically applied by your installer. Hence, there’s no need to complete any application process.

Recently Expired: Domestic RHI

The Domestic Renewable Heat Incentive (RHI) expired on 31 March 2022 to new applications. Through the RHI, homes could save up to £2,981 on solar thermal panels. It has since been replaced by the Boiler Upgrade Scheme (BUS). However, BUS is intended for upgrading to heat pumps and biomass boilers, not solar panels.

Through the Domestic RHI, you can save up to £2,981 on solar thermal panels. Unlike solar PV, solar thermal doesn’t generate electricity but has two main advantages. They use sunlight to heat your water which can be used as a wet central heating system and can also be supplied to your taps and showers.

You will receive domestic RHI payments over 7 years that can ideally recoup the majority of the costs of the installation since solar thermal panels cost around £4,000 on average.

The property must first obtain an Energy Performance Certificate (EPC) assessing its energy efficiency and how it could improve, which is required for the RHI application.

Recently Expired: Feed-In Tariff (FIT)

The Feed-in Tariff was implemented in 2010 and ran successfully for many years. The FIT scheme closed for new applications in 2019, however, those that are currently registered will continue to benefit from it.

Under this scheme, those who generate electricity via solar panels or wind turbines receive a certain amount of money for each unit (kilowatt per hour) they produce, and for the extra electricity they sell back to the grid.

The specific amount received varies based on the size of the system, the type of technology and when it was installed. The payments last for a total of 20 years from the date of registration, significantly reducing the payback time of the initial investment.

You had to choose a certified installer, and you were then able to choose between receiving the payments from your energy supplier or a list of registered suppliers. The payments are divided into two types:

  • The Generation Tariff is a set amount of all the energy produced and used that depends on the factors mentioned before. The tariff ranges between 6.38p – 13.88p per kWh/h depending on the size of the system;
  • The Export Tariff relates to the electricity in excess that you sell, for which you will get 4.77p per unit. You will be able to sell half of the total energy you produce.

Recently Expired: Free Solar Panel Scheme

Previously, if you could not afford to buy solar panels, you had the option of acquiring them for free from companies that would rent your roof space for up to 25 years. With this scheme, a company would offer to provide the free solar panels, take care of solar panel installation and maintenance for free, and in return receive the Feed-in Tariff (FIT) payments.

Instead, a scheme called ‘solar buyback’ has become another possibility, where companies offer homeowners a lump sum upfront, and in return collect the FIT payments the homeowner would have received. However, it is important to evaluate an offer like this in relation to the total FIT payments you would receive to determine whether or not this buyback scheme would be worth it.

Is UK Solar Panel Funding Legitimate?

The answer is yes. Through ECO4, it’s possible to recoup the majority of the installation costs of solar panels. As a bonus, you can also recoup the costs of other energy-saving measures like insulation as well ⁠— if you as a homeowner meet the criteria. And through the Smart Export Guarantee, you can earn money by generating extra electricity from your solar panels.

To maximise your savings, it’s important to stay up to speed with grants ⁠— GreenMatch reviews solar panel funding regularly and our articles are updated in line with recent government announcements.

Additionally, it’s important you ensure you apply grants to the right panels. There’s no point in getting a grant for a panel that’s sub-par or not suited to your home. The right panel is tailormade to the requirements of your home and we make it easy for you to make an objective decision by comparing up to 4 tailormade solutions available near you.

You can find further information regarding the different energy grants on the Government’s website, where you will find all the information you need about the aids related to solar panels, as well as grants for other renewables, such as heat pumps and boilers.

After collecting the information, if you decide to invest in solar power or other sources of clean energy, GreenMatch can help you receive up to 4 free, non-binding quotes for solar panels, heat pumps and boilers.

Instead of calling multiple installers to look for the prices, we can help you by using our network of trustworthy solar panel installers to help save you time and effort. All you need to do to get started is click the button below and answer some questions about your heating demands. We’ll take it from there for you.

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