Over 1.3 million buildings in the UK currently use solar panels, and this figure continues to increase. This trend can be attributed to the significant decrease in solar panel costs, which have dropped by 82% since 2010.
Now is an opportune time to consider adopting solar panels, as they are currently subject to a 0% VAT rate. Additionally, the Smart Export Guarantee (SEG) provides compensation for surplus energy you generate but do not consume.
This detailed UK solar incentives guide will delve into various incentives available for both new and existing solar panel installations. By taking advantage of these incentives, you can maximize your savings during the ongoing cost of living crisis.
Incentive #1: ECO4
The ECO4 scheme offers the opportunity to get solar panels if your home’s heating is powered by electricity, such as an air source heat pump or electric boiler. The ECO4 scheme is a government-funded initiative that runs from July 2022 to March 2026.
All residents of England, Scotland, or Wales with a household income of less than £31,000 per year are eligible. The ECO4 scheme is also available to individuals who are referred to the program by an energy provider, local authority, or doctor. Lastly, individuals receiving certain government benefits are also eligible.
Before receiving solar panels, your home must meet insulation requirements. With ECO4, you can potentially save up to 100% of the cost of solar panels, but they must be used to power a heating system. If you intend to use your solar panels to power lights, TVs, and computers, you will not qualify.
The average three-bedroom household can save £7,860 through this program.
To apply for ECO4, you need to contact one of the energy suppliers responsible for carrying out the improvements. You have the flexibility to choose the company that best suits your needs and can approach multiple suppliers.
The application process involves a telephone assessment, where you will be asked about your income, benefits, and property’s energy efficiency rating. The energy supplier will then schedule a visit to determine if your home is suitable for the grant.
The current list of energy suppliers providing ECO4 measures includes British Gas, Ecotricity, EDF, ESB Energy, Octopus Energy, Outfox The Market, OVO Energy, Scottish Power, Shell Energy, SO Energy, The Co-Operative Energy, The Utility Warehouse, and Utilita Energy.
Incentive #2: Home Upgrade Grant
From April 2023 to March 2025, homeowners in 45 local authorities in England have the opportunity to receive grants of up to £10,000 for home improvements, including the installation of solar panels. The scheme has already allocated 27% of its grants for solar panels, along with other upgrades like insulation, heat pumps, double glazing, solar thermal, and heating controls.
On average, local authorities cover 87% of the panel costs, with some cases covering the full amount.
In order to be eligible for the Home Upgrade Grant, households must not be connected to the gas grid and should have a total gross annual income below £31,000. Additionally, the property needs to have an Energy Performance Certificate (EPC) rating of E, F, or G.
For a typical three-bedroom house, this can result in a saving of £6,800 on installation expenses. Furthermore, households can anticipate electricity bill savings of around 64%. On average, this translates to savings ranging between £8,000 and £20,000 over the next 25 years, depending on the size and location of the property.
To apply for the Home Upgrade Grant, homeowners in the eligible local authorities can reach out to their respective authorities for further guidance. Click on this link to get a full list of the 45 eligible local authorities.
Incentive #3: Smart Export Guarantee (SEG)
The Smart Export Guarantee (SEG) replaces the Feed-in Tariff and ensures that energy suppliers compensate homeowners for any solar-generated electricity that goes unused.
Unlike the previous government-based system, the SEG allows suppliers to set their own repayment rates, encouraging competition and better deals for homeowners. This new scheme is more equitable, as homeowners are now paid for every kilowatt-hour of electricity they send back to the grid. Having a smart meter simplifies this process.
Alternatively, some homeowners use a solar diverter to redirect excess energy to specific appliances. To take advantage of the SEG, use this tool to get free quotes from local experts.
On average, individuals can expect to save around £159 per year. Some companies even pay as much as 12p per kWh for excess solar energy generated by domestic systems. Over the lifespan of your solar panels, this can add up to an impressive total saving of approximately £4,000 from the SEG alone.
With the SEG in place, homeowners now have the opportunity to benefit fully from the hard work of their solar panels.
To maximize the benefits of solar panels, it is recommended to combine them with a solar battery, creating a ‘solar-plus-storage’ system. By storing surplus solar electricity generated during the day, a solar battery ensures that it is available for use in the evenings when energy demand is higher.
Applying for the SEG is a straightforward process. Contact your desired supplier, follow their specific application procedure, and complete the necessary form. By doing so, you will soon begin receiving SEG payments.
It’s worth noting that you are not obligated to obtain your SEG tariff from the same company you purchase your electricity from. However, some suppliers may offer higher rates to their own customers.
As long as you meet all the eligibility requirements stated above, you can expect to start receiving SEG payments without delay.