Are Solar Panel Finance Options Available?

In pursuing sustainable energy solutions, solar panels have gained considerable popularity among homeowners aiming to harness the sun’s power while minimising their environmental impact. 

However, the initial investment required for installing solar panels can present a significant obstacle for many individuals wanting to use this technology. To bridge this financial gap and ensure widespread access to solar energy, a range of financing options has emerged, empowering homeowners to adopt solar power without bearing a hefty upfront cost. 

In this article, we delve into the availability of UK solar panel finance options, delving into their advantages and providing essential considerations for homeowners eager to embrace clean energy through accessible and economically viable financing solutions. 

By gaining insight into the financial avenues available for solar panel installations, homeowners can confidently navigate their choices, aligning their energy aspirations with their financial circumstances.

What’s On This Page?

  1. The Benefits Of Investing In Solar Panels 
  2. The Home Upgrade Grant (HUG)
  3. The ECO4 Scheme
  4. Reduced VAT On Energy Saving Products 
  5. The Smart Export Guarantee (SEG)
  6. The Nest Scheme
  7. What To Do If You’re Not Eligable For Solar Panel Grants
  8. Are Solar Panels Worth The Investment?
  9. Finance Your Solar Panel Purchase With Smartly 

The Benefits Of Investing In Solar Panels UK

Before we get into exploring the different UK solar panel finance options which are available, it’s important to take a look at why someone should think about investing in solar panels in the first place. Installing solar panels in your home or business can offer significant benefits such as:

  • Renewable Energy Generation: By utilising solar power, homeowners reduce their reliance on fossil fuels, contributing to the overall reduction of greenhouse gas emissions and combating climate change.
  • Cost Savings on Energy Bills: Solar panels generate electricity directly from the sun, allowing homeowners to offset their reliance on traditional grid electricity. This leads to substantial savings on energy bills, as solar-generated electricity can power household appliances and lighting during daylight hours.
  • Smart Export Guarantee & ROI: The introduction of the Smart Export Guarantee (SEG) ensures that homeowners can receive payments for excess energy exported to the grid, providing a financial return on their solar investment.
  • Enhanced Property Value: Properties equipped with solar panels often attract environmentally conscious buyers and can command a premium price.

As demonstrated above, there are numerous incentives which make solar panels a fantastic investment for many UK homeowners. 

But what about the upfront costs? Here are some schemes and financial incentives to explore before investing in solar panels:

Home Upgrade Grant (HUG)

From April 2023 to March 2025, eligible homeowners in 45 local authorities across England can secure up to £10,000 to enhance their properties. 

These grants have been arranged to help homeowners make energy-efficient improvements to their properties, such as insulation, heat pumps, double glazing, solar thermal systems and heating controls. Solar panels currently make up 27% of the active grants and are encouraged as a way of producing clean energy.

The amount of funding you will receive from your local authority will depend on the funding available in that jurisdiction. However, an average of 87% of costs are covered with most installation projects. 

Am I Eligible For A Home Upgrade Grant?

To qualify for a home upgrade grant, your household must:

  • Fall within one of the approved local authorities.
  • Not be connected to the gas grid.
  • Have a total gross annual income under £31,000.
  • Have an Energy Performance Certificate (EPC) rating of E, F or G.

Overall, the scheme is in place to help those who could benefit from the effects of clean energy production. If your home has a good EPC rating, you are unlikely to qualify for the grant. 

How Do I Apply For A Home Upgrade Grant?

To apply for HUG, you will need to contact your local council. They are the people that will put in a request with the Government if you are eligible for the grant. 

The ECO4 Scheme

The introduction of ECO4 (Energy Company Obligation) on 1st April 2022, effective until March 2026, marks a significant milestone in the UK’s efforts to improve energy ratings of homes and curtail carbon emissions. 

With a substantial government allocation of £4 billion over four years, this scheme aims to enhance the energy efficiency of UK households. ECO4 sets itself apart from its predecessor, ECO3, by widening the eligibility criteria through LA Flex, offering more individuals the opportunity to qualify for the scheme.

Key Advantages of ECO4 Scheme

The ECO4 initiative empowers low-income households to replace outdated heating systems with efficient and eco-friendly alternatives, such as solar PV panels. 

Qualified households anticipate an average reduction of around £290 in annual energy bills. For homes with the least efficient systems, this figure could reach as high as £1,600 per year.

Eligibility Criteria For ECO4 Scheme 

To participate in the ECO4 scheme and be eligible for solar PV panels, specific requirements must be met. These include:

  • Possessing an inefficient heating system falling within the D-G energy efficiency band.
  • Ownership or residency in privately rented accommodation.
  • All-electric homes (both on and off-gas) where biomass boilers or District Heat Network have been ruled out.
  • Receipt of government benefits (e.g., child benefits or income support).

For individuals who do not currently receive benefits but are classified as low-income, ECO4 LA Flex offers an alternative pathway for qualification. 

LA Flex grants councils the flexibility to establish regional eligibility criteria, no longer limited to benefits or income alone. This approach allows customisation based on age, household size, presence of children, and property conditions.

 Consequently, more individuals throughout the UK will have access to solar panel grants, fostering wider adoption of renewable energy solutions.

Reduced VAT On Energy Saving Products 

Commencing in April 2022, homeowners in the UK have gained an advantage as energy-efficient measures become eligible for a 0% Value Added Tax (VAT) on both materials and installation.

Previously, the VAT rate on renewables was 5%, a comparatively low rate. However, eliminating this VAT gives homeowners an unprecedented opportunity to realise their renewable energy aspirations. This significant change, coupled with solar panel grants, brings homeowners closer than ever to embracing sustainable energy sources.

How To Qualify For 0% VAT On Solar Panels 

To qualify for the 0% VAT rate, certain requirements must be met by both your home and the new installation:

  • The installation and the associated product must be conducted together as a cohesive unit. This ensures that energy-saving measures are implemented comprehensively.
  • While it is permissible to include the installation of other goods or services, such as insulation, alongside the primary energy-saving materials, the majority of the work must focus on the implementation of these energy-saving components.

By satisfying these stipulations, homeowners can avail themselves of the 0% VAT rate, unlocking the financial benefits of energy-efficient installations and fostering a greener and more sustainable living environment.

Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG) is a program implemented in the United Kingdom to support the deployment of small-scale renewable energy systems, including solar panels, by providing a mechanism for energy producers to receive payment for the surplus electricity they export back to the grid.

Under the SEG, eligible solar panel owners can receive payments from their energy suppliers for the excess electricity they generate and export to the grid. This export payment incentivises homeowners and businesses to install renewable energy systems and contribute to the overall energy transition.

Whilst this particular scheme doesn’t offer up-front payment for solar panel installation, it does help increase the speed of your return on investment. 

Eligibility for the SEG Scheme

The Smart Export Guarantee (SEG) in the United Kingdom extends eligibility to all homeowners who have installed conventional solar panel systems with a capacity of up to 5 megawatts (MW). 

To accurately measure and quantify the exported electricity, a prerequisite for participation in the SEG is the installation of a smart meter within the residence.

 It’s worth noting that certain energy suppliers may exclusively provide distinct tariff rates solely for energy exported from specific solar battery storage systems.

What Happened To The Feed-In-Tarrif (FIT) Scheme? 

Previous to SEG, there was the FIT scheme. The Feed-in Tariff, also known as the Generation Tariff, was a government initiative that provided financial incentives to households for generating electricity from renewable sources. Homeowners were paid for each kilowatt hour (kWh) of renewable electricity they produced, and any surplus electricity could be sold back to the National Grid through the Export Tariff.

The Feed-in Tariff played a crucial role in fostering the rapid growth of the UK solar market during its successful nine-year tenure. Its impact was significant, encouraging more homeowners to embrace renewable energy generation.

Although the Feed-in Tariff concluded in April 2019, participants who enrolled before the deadline will continue to receive payments until their contractual period, typically lasting 20 years, comes to an end. 

The scheme was closed due to the dropping cost of domestic solar panels, making them more affordable, and the government’s incentive to work on more commercial and large-scale solar projects. 

Despite its closure, the legacy of the Feed-in Tariff continues to drive the adoption of renewable energy systems across the country.

The Nest Scheme (Wales)

If you live in Wales, you may be eligible for a grant via the Nest Scheme. The Nest Scheme offers home improvements to help reduce your energy bills, such as new boilers, central heating, insulation or solar panels. 

However, this scheme requires that you be on a low income, receive a means-tested benefit and have a respiratory, circulatory or mental health condition. It focuses on providing long-term assistance for those who may be unable to work to afford such improvements for themselves.

Am I Eligible For The Nest Scheme?

To be eligible to apply for the Nest Scheme, you must:

  • Own or privately rent your home (not from a local authority or housing association)
  • Have a home which is energy inefficient and expensive to heat
  • You or someone you live with must receive a means-tested benefit or have a chronic respiratory, circulatory or mental health condition and an income below the defined thresholds.

It is also worth noting that this scheme is not available anywhere in the UK apart from Wales. It is an initiative from the Welsh Government to improve energy efficiency for those who need it most. 

What To Do If You’re Not Eligable For Solar Panel Grants 

Whilst government grants and schemes can be a great way to make solar installations more affordable, a large majority of the British public may not qualify for money towards their solar panels or tiles. 

The majority of current government initiatives and grants are aimed towards people who are living in energy poverty and will see the long-term benefits of an installation such as solar panels in improving their homes’ energy efficiency ratings. 

If you do not qualify for a grant but need help financing your solar panels, there are some other options you can take to make solar panels a viable investment.

Home Improvement Loans 

Many UK banks and authorities offer home improvement loans to help people make their homes more energy efficient. This may include financing the initial purchase and installation of solar panels. 

Solar panels have a long lifespan, typically lasting 25 years or more. By financing the installation with a home improvement loan, you spread the cost over time, making it more manageable and allowing you to enjoy the benefits of solar energy throughout the loan term and beyond.

If you are interested in taking out a home improvement loan, speak to your bank or local authority about the options available and discuss loan payment options that you are comfortable with. 

Split The Cost With Financing 

Many solar panel manufacturers and installation companies may offer solar panel financing options. Financing differs slightly from a loan, as it often allows you to pay off the cost in instalments with 0% APR. 

If you are confident that you will be able to pay off your instalments at the set times, this can be a fantastic way to split the cost of solar panels into more manageable payments. 

Are Solar Panels Worth The Investment?

There are several compelling reasons why solar panels are worth your investment. Let’s take an in-depth look at some of the key reasons why we believe solar panels are an excellent investment for your future:

Energy Cost Savings: Solar panels generate electricity from sunlight, reducing your reliance on grid-supplied power. By producing your own clean energy, you can significantly lower or even eliminate your monthly electricity bills. Over time, the savings on energy costs can add up and provide a substantial return on your investment.

Return on Investment (ROI): The cost of installing solar panels has significantly decreased over the years, making it more affordable for homeowners. With the combination of energy savings, potential incentives, and favourable financing options, you can recoup your initial investment within a reasonable timeframe.

Increased Property Value: Solar panels are considered a valuable home improvement. Studies have shown that homes equipped with solar panels have higher resale values and can attract more potential buyers. The presence of solar panels demonstrates energy efficiency, sustainability, and long-term cost savings, making your property more appealing in the real estate market.

Long-Term Durability and Maintenance Savings: Solar panels have a long lifespan of 25 years or more, with minimal maintenance requirements. Once installed, they can continue producing electricity reliably for decades. This longevity translates into long-term savings on maintenance costs, as well as protection against rising energy prices in the future.

Environmental Benefits: Investing in solar panels contributes to a greener future by reducing carbon emissions and dependence on fossil fuels. By generating clean, renewable energy, you actively participate in mitigating climate change and promoting environmental sustainability. This aligns with the growing demand for eco-friendly solutions, making solar panels an attractive feature for environmentally conscious individuals and communities.

By considering the financial benefits of energy cost savings, government incentives, increased property value, environmental impact, and long-term durability, it becomes evident that solar panels are a wise financial investment. 

They provide a favourable return, contribute to a sustainable future, and offer a reliable and clean source of energy for years to come.

Finance Your Solar Panel Purchase With Smartly 

If you are looking for a high-quality solar panel installation, Smartly is here to help. Our solar panel experts can help you with everything from purchasing your panels to designing and sourcing their installation.

Smartly boasts a team of experienced professionals who specialise in solar panel installations. Our expertise ensures your system is designed and installed to the highest standards, maximising energy generation and efficiency. By partnering with Smartly for your installation, you can trust that you are working with industry leaders committed to delivering top-quality solutions.

Additionally, we offer a range of financing options to help you split the cost of your purchase. When you shop with us, you can choose from flexible financing options such as:

  • Kandoo: Kandoo allows you to split the cost of your solar panels over 1-5 years. It offers an instant decision as to if you are eligible and will not affect your credit score. 
  • Klarna: Klarna offers you the opportunity to split the cost of your solar panels over 3 monthly instalments. This is a great option to pay off your total bill faster. 

To find out more about the solar panel finance options available to you, please get in touch with us. Our helpful advisors will be happy to answer any questions you may have.