Solar Panel Grants UK 2026 — Free Schemes & Funding

The UK offers 0% VAT on solar installations, ECO4 free solar for eligible low-income homes, and the Smart Export Guarantee paying 4-15p/kWh for surplus electricity. No direct government solar rebate exists, but these schemes make solar more affordable than ever.

0% VAT: Saving 20% on Solar Installation

Since April 2022, solar panel installations on residential properties in England, Scotland, and Wales are zero-rated for VAT. This means you pay no VAT on the supply and installation of solar panels, battery storage, and other energy-saving materials. On a £6,000 system, this saves £1,000 compared to the previous 5% reduced rate. The 0% VAT applies to: solar PV panels, battery storage systems, insulation materials, heat pumps, and other energy-saving measures. It covers both the materials and the labour for installation. Eligibility: The property must be a dwelling (not commercial). The installer must be VAT-registered and MCS-certified. The 0% rate was initially set until March 2027 and may be extended. If your installer quotes you including VAT, challenge it — they should apply 0% for residential solar. Northern Ireland: Slightly different VAT rules apply. Check with your installer for the current applicable rate.

ECO4 Scheme: Free Solar for Eligible Homes

The Energy Company Obligation 4 (ECO4) scheme requires large energy suppliers to fund energy efficiency improvements for low-income and vulnerable households. Solar panels are included as an eligible measure. Eligibility: You must receive certain means-tested benefits (Universal Credit, Pension Credit, Income Support, Jobseeker's Allowance, Employment and Support Allowance, Child Tax Credit, Working Tax Credit). Your home must have an EPC rating of D, E, F, or G. The property must be your primary residence. What you get: Free solar panel installation (typically 3-4kW). May include insulation, heating upgrades, and battery storage as part of a whole-house approach. The scheme aims to improve your EPC by at least two bands. How to apply: Contact your energy supplier's ECO team, use the Simple Energy Advice service (gov.uk/simple-energy-advice), or contact a registered ECO installer. Wait times can be 3-6 months depending on demand and funding availability. LA Flex (Local Authority Flex): Your local council can also refer households that don't meet standard ECO criteria but are considered fuel-poor. Contact your council's housing or energy team.

Smart Export Guarantee (SEG): Get Paid for Solar Surplus

The SEG requires licensed electricity suppliers with 150,000+ customers to offer a tariff for small-scale exported electricity. Current rates (2026): Octopus Energy: 12-15p/kWh (typically the best rate). British Gas: 5-6p/kWh. E.ON: 4-5p/kWh. EDF: 5-6p/kWh. Scottish Power: 4-5p/kWh. Earning potential: A 4kW system exporting 50% of 3,400 kWh = 1,700 kWh. At Octopus's 12p: £204/year. At British Gas's 5p: £85/year. Always shop around — you don't need to be with the supplier for your main electricity. Requirements: MCS-certified installation. Smart meter installed (SMETS2). Register with your chosen SEG supplier (takes 1-2 weeks). Agile Outgoing (Octopus): Variable export rate tied to wholesale prices. Can earn 20-30p/kWh during winter evening peaks when your battery exports. Advanced but potentially more lucrative than flat SEG rates.

Local Authority and Community Schemes

Many local councils and community organisations offer additional solar support. Solar Together: A group-buying scheme run by several councils (London boroughs, county councils). Aggregates demand for bulk-discounted solar installations — typically 15-25% below individual quotes. Check if your council participates at solartogether.org.uk. Community energy schemes: Some areas have community solar cooperatives where you invest in shared solar installations and receive dividends. Check communityenergyengland.org for schemes near you. Scottish Government: Home Energy Scotland offers interest-free loans up to £7,500 for solar panels (plus £6,000 for battery storage). Combined loan: up to £13,500 at 0% interest over 10 years. This is one of the UK's most generous solar finance schemes. Welsh Government: The Warm Homes Nest scheme offers free energy improvements for eligible households. The Optimised Retrofit Programme funds whole-house energy upgrades including solar for social housing. Energy Performance Certificate (EPC) benefit: Solar panels improve your EPC rating by 1-2 bands. This can increase property value by 2-4% and make your home more attractive to buyers.

Making Solar Affordable: Finance Options

Cash purchase: Best value — no interest costs. A 4kW system at £6,000 cash delivers 100% of the savings from day one. Payback: 6-9 years. Green home loans: Several lenders offer specific green home improvement loans at competitive rates. Rates: 3-6% APR for £5,000-10,000 over 3-7 years. Monthly payment: approximately £90-140 for a £6,000 loan over 5 years. Your solar savings (£50-75/month) offset most or all of the repayment. Home Energy Scotland loan (Scotland only): 0% interest, up to £7,500, repaid over 10 years. Monthly payment: £62/month for £7,500. Your savings exceed the repayment from year one. Solar lease/PPA: A company installs solar for free and you buy the electricity at a reduced rate (typically 10-15p/kWh vs 24.5p grid). You save money with no upfront cost, but the company keeps the SEG payments and owns the panels. After 20-25 years, ownership transfers to you. Less financially beneficial than buying outright but accessible for those without capital. Mortgage addition: Adding £5,000-8,000 to your mortgage at 4-5% over 25 years costs £26-42/month. Solar savings (£50-75/month) exceed the mortgage cost, making it cash-flow positive from day one.