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Government grants for solar panels

Find out more about government grants for solar panels

In the UK, promoting the use of renewable energy sources has been high on the government’s agenda for many years.

This is reinforced by the EU’s Renewable Energy Directive, which set a target for all member countries to achieve a 20% renewables target before the year 2020.

With this is mind, there are government schemes in place that cater to the needs of domestic solar panels for homeowners, as well as business solar panels, which are installed in small to medium-sized businesses, based in office premises.

However, it’s important to keep in mind that, over recent years, a number of policies have been scrapped and incentives have been reduced. This is in response to a reduction in the cost of solar panel prices.

In this article, we’ll take a look at the current availability of government grants for solar panels, and who qualifies for these grants. We’ll then move on to looking at the availability of government grants for solar panels for business, as well as the benefits that come hand in hand with installing social PV systems on your business and the advantages of taking advantage of a government scheme when you do so.

Is there a government grant for solar panels?

So, is there are a government grant for solar panels?

The government does not technically offer grants for solar panels. Instead, they offer a Feed-in Tariff (FiT), whereby they will pay you for the energy you produce using your solar panels.

The solar Feed-in Tariff was deigned to reward homeowners who install solar panels on their property, with the government paying for every kWh of energy the panels generate.

Under the scheme, homeowners get paid for the energy they use (the generation tariff), as well as the energy they don’t use (the export tariff). All of the money you receive is tax-free and index linked. The scheme applies for 20 years, and you can expect to make a good return on investment during that period, with homeowners typically earning and saving up to £8,080 over the 20 years.

Of course, on top of this, you should also notice that your energy bills drop significantly as your panels will be generating free electricity.

2016 changes to the scheme

The FiT scheme is not as profitable as it was originally. As the cost of solar panels dropped significantly, in 2015, the government announced plans to reduce the feed-in Tariff by 87%, although this was renegotiated to a drop of 64%. The old FIT scheme closed on 14 January 2016.

On 8 February 2016, a new scheme was introduced with different tariff rates and rules. However, homeowners can still expect to make a good return on investment over the 20 years. Under the new rules of the FiT scheme, there is now a cap on annual spending. This limits the amount of solar energy that can be registered for the FiT each quarter. Applications received after the cap is reached will be put into a queue for the next quarter.

The feed-in rate for new applicants now reduces every quarter. Once you’ve registered your panels, you lock in your guaranteed payments for the 20 year lifespan of the Feed-in Tariff, protecting you from any potential future cuts to the scheme.

How does the FiT scheme work?

If your application for the Feed-in Tariff is successful, you’ll receive a fixed amount for each unit of electricity you generate. This is known as a generation tariff. The rate you receive will depend upon:

  • The size of your system
  • Which technology you installed
  • When your system was installed
  • How energy efficient your home is

To benefit from the scheme, you’ll need to use a certified installer to set up your solar panels.

If you have any leftover units of solar power once you’ve powered your home, you can sell off any units that you don’t use. This is known as the export tariff.

The export tariff is a fixed rate of 4.85p per unit of electricity you sell. You can sell back up to half of the units you generate in total.

Government grants for solar panels for business

We’ve discussed the government grants for homeowners, but are there any government grants for solar panels for businesses?

Yes. The Feed-in Tariff applies to business as well as homeowners. Under the government’s FiT scheme you’ll be paid for every unit of electricity that your company’s solar PV system generates whether you use it or not and, in most cases, you’ll also be paid for the unused electricity you export back to the grid.

The scheme has already helped to encourage over half a million homeowners and thousands of businesses to install solar PV. This has made a significant contribution towards the Government’s target of generating 15% of UK electricity via renewable energy sources by 2020.

Although the government’s Feed-in Tariff was heavily cut in January 2016, it’s still possible for your business to make good financial returns if you’re buying solar panels outright.

How does FiT work for businesses?

The Feed-in Tariff for businesses mirrors the scheme for homeowners and consists of two elements – a generation tariff and an export tariff.

For the generation tariff, your energy supplier will pay you the current FiT rates depending on the size of your system, for every unit of electricity your system generates.

The export tariff element depends upon the size of your system. For smaller systems under 30 kWp, your electricity provider will assume that you only use half of the electricity generated, and will export the other half back onto the grid. You will then receive the current export rate for a quantity of electricity equivalent to half of your generation.

If your system is over 30kWp, you’ll need to have an export meter fitted if you want to receive export payments. You might also be required to pay an annual fee to your electricity supplier for the service.

Is my business eligible for FiT?

To claim the Feed-in Tariff, your business and your solar PV system must meet a set of criteria, including:

  • Your installer must be accredited with the Microgeneration Certification Scheme (MCS)
  • Your panels must be new and MCS approved
  • Your energy supplier must offer FiT payments – the big 6 providers are legally obliged to offer payments under the scheme and many smaller suppliers have now also opted in

Power purchase agreement

If your business meets certain criteria, you could also be eligible for a fully funded system through a power purchase agreement, where solar panels are installed on your roof at no cost to your business and the generated electricity is purchased back from the funder at a significantly lower cost than your existing supplier.

A power purchase agreement (PPA) is a popular ‘free solar’ scheme that offers credible businesses long-term financial, accounting, and eco benefits. Under the scheme, one business (you) generates the solar energy, whilst the other one purchases it.

Under a PPA, your business won’t face any upfront costs of on-going fees, so you’ll make savings from day one and continue to benefit for the full term of the agreement, which usually lasts for a minimum of 20 years.

Whether you’re looking to save money, save the environment, and secure future energy generation for your business, solar panels can be a great option for your business.

Solar panels can be used across a whole host of sectors, including

  • Catering, hospitality, and leisure – where energy comes at a huge cost and businesses often have large, unused roof spaces
  • Construction and engineering – businesses within this sector are under increasing pressure to meet minimum renewable energy requirements
  • Farming and agriculture – a great source of extra income and a boost for green credentials
  • Government and public sector
  • Schools, colleges, and universities
  • Shops and retail – cut energy bills and help to bring down overheads
  • Hospitals and healthcare
  • Offices
  • Warehouses and manufacturing

The use of solar panels can provide a huge range of benefits for businesses, including:

  • Significant reduction in energy bills, saving you money and reducing your regular outgoings.
  • Maintenance free systems
  • Add value to your commercial building
  • Protect your business against any potential energy shortages in the future
  • Protect your business from rising energy costs
  • Reduce your carbon footprint
  • Tax advantages
  • New marketing and PR opportunities

The benefits of taking advantage of the government’s FiT for businesses, include:

  • Generate income
  • All FiT payments are tax-free for the entire time they are paid