Installing solar panels is an excellent way to reduce your electricity bills, improve the energy efficiency of your home or business, reduce your carbon footprint, and invest in your future.
Most domestic solar panel installations offer a 4.8% return over 25 years at the current FIT and electric rates, which means that you can actually earn more through your solar panel grants than with an ISA. And, commercial installations can eventually see a larger return because the system is larger.
However, solar panels are still costly to install, despite the more than 62% drop in installation costs since 2010. If you don’t have the upfront capital, solar panel prices are a significant barrier to going green. The average domestic solar panel system costs £6,000 as of 2016, and that’s a hefty investment for many. If you’re hoping for solar panel grants to help you with the installation costs, there are some options available in the UK, as well as several government subsidies designed to help you earn your money back as quickly as is possible.
Solar Panel Grants in the UK
The government offers an easy subsidy program that you can use to earn money back from your panels in lieu of offering a grant to help with the initial installation. Previously, you could also apply for a Green Deal Grant.
The Green Deal Finance Grant – The Green Deal Grant was a government grant set up to help with the installation of renewable incentives such as solar panels in the UK. However, the government ceased funding the Green Deal Finance Company, officially ending the program in August of 2016. While it is still listed on most government websites, you can no longer apply for the grant.
However, you can still earn money back from solar panels through the Feed in Tariff, a government subsidized tariff intended to reimburse you for the energy that you generate.
Feed in Tariff (FITS)
The Feed in Tariff ensures that you are paid for every Kilowatt (Kw) hour of energy that your solar panels produce.
Feed in Tariff – The rate you are paid changes based on the size your solar array, but as of quarter 4 of 2016, starts at 4.18 pence per kWh.
Export Tariff – You can also benefit from the Export Tariff. This is the rate you are paid for electric that you export to the grid. Unless you have a smart meter, this is typically estimated to be about 50% of your total energy production.
Energy Bill Savings – This rate will depend on your total energy usage and the size of your solar array.
|System Size||Estimated Cost||Estimated Output||Estimated First Year Returns||Estimated Profit over 20 Years|
|1 Kw||£2,000-3,200||850 kWh||£130||£100|
|4Kw||£5,500 – 8,100||3,400 kWh||£404||£2,080|
The average return for a domestic solar installation, including FITs and energy bill savings results in a return of about 4.8% over 25 years. This makes solar panels a great investment if you do have the money.
However, if you don’t have the capital to invest in the solar panels upfront you can look for other solutions.
Solar Panel Grants, Funds, & Affordability Schemes
While there are no government funded domestic solar panel grants, there are a number of solar panel funds set up to help homeowners afford and invest in solar or other renewable incentives for their home.
OFGEM ECO – The Energy Company Obligation or ECO includes both the Home Heating Cost Reduction Obligation (HHCRO) and the Carbon Saving Community Obligation (CSCO). This obligation sometimes includes support and grants for installing solar panels and other carbon reducing technologies for those who qualify. In most cases, qualifying homes are low-income, receive benefits, and/or live in rural areas. If you think you qualify, you can contact the Energy Saving Advice Service in England or Home Energy Scotland or check with any of the obligated energy suppliers to find out if they can help you.
Energy Saving Advice Service
0300 123 1234
Monday to Friday: 9am to 8pm
Home Energy Scotland
0808 808 2282
Monday to Friday: 8am to 8pm
Saturday: 9am to 5pm
Each of these are government funded and can help with brokering deals between local utilities and authorities, can help with ensuring that you are getting appropriate tax cuts and benefits, and to help ensure that city council funding is being allocated properly to fund those who need it.
Solar Panel Loan Schemes
There are many banks and institutions in the UK that offer loan schemes for installing renewable energy or carbon reducing technology such as solar panels. These are typically available locally, but can be available from large companies, and typically have the same interest rates as most bank loans. In some cases, you may also be able to secure a no-interest or low-interest loan.
Banks – Most local banks are more than willing to work with a lower interest rate for a solar panel installation. You should discuss your options with your local bank if you are interested in taking out a loan. However, as loans have high interest rates, this may negate your return on your solar panels.
RHI for Solar Thermal
If you are installing solar thermal rather than solar PV panels, you may qualify for a Renewable Heat Incentive. This is similar to the Feed in Tariff, except you are paid quarterly for a period of 7 years. Applicants submitting to the RHI between October and December 2016 will receive 19.74 pence p/k Wh of heat produced.
In some cases, you may also qualify for a government grant or public funds through your local City Council for the installation of solar thermal.
Free Solar Panels
If you cannot afford the upfront costs of installing solar panels but still want some of the benefits, free solar panels are an alternative. However, they come with several drawbacks, including that you will not keep any of the Feed in Tariff funds produced by the panels. These programmes are also known as “Rent a Roof” and are available from a number of companies around the UK.
How Does It Work – Companies like Isis Solar, HomeSun, and A Shade Greener review your property, decide if your home is appropriate for solar panels, and then install panels at their own cost. They then have you sign a power purchase agreement, which ensures that they get the rights to all of the Feed in Tariff rates produced by the panels over the next 25 years, and sometimes the lifetime of the panels. This contract is tied to the home, so you cannot bring the panels with you if you move.
In most cases, you can save anywhere from £75-250 on your electric bill per year depending on the size of the array but that’s it. The average homeowner can expect to see about a 10-30% drop on yearly electric costs.
Is It Worth It? – If you can afford to purchase and install your own system, you can earn a great deal more in terms of returns by installing your own panels. However, if your primary goal is to go green rather than earning or saving money, a free solar panel scheme may be a great fit for you. You can still save some money, and will reduce your carbon footprint, but the tangible benefits will be low. If you or a family member is frequently at home during the day, then you can expect to save more, by using more electric while the sun is producing it.
Solar Panel Grants in Ireland and Scotland
If you live in Ireland or Scotland, there are more solar panel grants available to you than in the rest of the UK. The government provides multiple solar grants and incentives designed to make solar panels more accessible, and you can take advantage of many of them.
Energy Saving Trust (HEEPS) – The HEEPS loan scheme is available for homeowners and for landlords and helps with interest free loans, helps with getting tax breaks and benefits, and sometimes offers support for making homes warmer or cheaper to heat.
Warmer Homes Scotland – The HEEPS Warmer Homes Scotland Scheme offers up to and over £4,000 of assistance to qualifying homeowners for installing renewables, insulation, and draught proofing.
Home Energy Scotland Renewable Loans – You may qualify for a zero interest loan of up to £2,500 for solar PV and up to £5,000 for solar thermal.
Affordable Warmth – Affordable Warmth offers solar PV and solar thermal panel grants to applicants in Northern Ireland.
Community Solar Panel Grants
Community solar panel projects are growing in size and in popularity as communities can earn money through investing in large scale solar projects. There are also a number of solar panel grants designed to help communities install solar and other renewables but most are available locally through local or regional groups.
Rural Community Energy Fund (RCEF) – The RCEF is a community fund of 15 million set up to provide assistance to feasible community renewable projects. The programme is specifically designed for rural communities and offers up to £150,000 in grant money to projects which offer economic and social benefits to the community.
Commercial Solar Panel Grants, Funds, and Loans
Commercial solar panel grants are available for schools, colleges, universities, public sector buildings, agricultural buildings, and small to medium sized businesses. Many small to medium sized businesses can also qualify for a 0% interest loan to help with the installation of carbon reducing technologies including solar panels and solar thermal.
Energy Efficiency Financing scheme (EEF) – The EEF was founded as a partnership between investment firm Siemens and Carbon Trust, and offers renewable energy grants and 0% interest loans to small to medium sized businesses. The EEF provides £550m of solar financing on a first come-first serve basis. Loans are given on a 7 year basis and start out as low as £1,000.
Shell Springboard – The Shell Springboard grant is a yearly solar panel grant awarded to small and medium businesses consisting of a one-time grant of one £150,000 grant and five £40,000 grants to be used towards solar and other carbon reducing initiatives for businesses. This commercial solar panel grant is given once a year in October.
The Carbon Trust Green Business Fund – The Carbon Trust Green Business Fund offers up to £10,000 to small businesses with fewer than 250 employees for installing solar panels or installing new technology to become a greener business.
City Council Funds – Schools, universities, colleges, and public sector buildings can attempt to get a grant or an interest free loan from the local city council. While these solar grants are not available everywhere, they are common, especially in areas with large solar initiatives. However, they are available in limited supply, and are typically only given to public buildings.
Interest Free Energy Efficiency Loan Scheme – Businesses in Northern Ireland can apply for the IFEELS to receive a loan of £3,000-400,000 depending on the project.
While there are very few options for domestic solar panel grants, you can still qualify for a number of different types of assistance for installing solar on your roof. With low interest loans, FITs, tax cuts, and some other subsidies available, you can earn your money back as quickly as possible. However, if you do not have the capital to invest in solar, you can also choose a Rent a Roof programme and still benefit from reduced energy bills.
If you choose to install the panels yourself and pay your own costs, you can earn considerably more because of the Feed in Tariff. However, it is important to ensure that you are getting the best solar panels if you want to maximize your returns. You can use our free tool to find and compare the top MCS certified solar panel installers in your area so you can choose the best deal. We can help you to get better quotes from top companies, so you can save up to 47% on the cost of installation.