As households and businesses across the UK look to reduce energy bills after announcements that energy bills are set to increase into 2026, on question remains central: “how do you pay for solar?”
The good news is that 2026 brings a wide range of financing options from grants and incentive to low interest green loans – designed to make solar power more accessible and affordable than ever before.
This guide breaks down the key routes to funding a solar installation, their advantages and what payback periods you can realistically expect.
Green Energy Loans
More banks and specialist lenders are supporting the transition to clean energy, Green Energy Loans are becoming the most popular way to finance a solar installation. These are purpose built loan products offering favourable terms for renewable technologies such as solar PV, battery storage, heat pumps and insulation upgrades.
Key Features
- Lower interest rates than standard personal loans
- Flexible repayment terms, often between 3 and 15 years
- No early repayment penalties with most lenders
- Fast approval based on installation quotes rather than property value
Why They Work Well for Solar
Solar systems produce immediate reductions in electricity costs. In many cases, the monthly loan repayment is the same or lower than the monthly energy savings, meaning your system becomes cash flow neutral or even cash flow positive from day one.
Government Supported Grants and Incentives
The UK government continues to support renewable energy adoption, but schemes vary depending on household income, property type and location. ECO4, Smart Export Guarantee (SEG), 0% VAT on solar panels and Local Authority Grants are all available options to investigate.
ECO4
ECO4 (Energy Company Obligation) currently supports low income households with grants towards insulation, heating upgrades and renewable technology. To qualify for ECO4 your home needs to have an EPC rating of D or below and you need to receive a qualifying benefit. ECO4 is scheduled to end in March 2026 (announced in the 2025 Budget), so eligible households should act promptly to secure funding while the scheme remains active.
0% VAT
When purchased and installed through a MCS certified installer, 0% VAT is paid on all solar panels and battery installations. This can reduce installation costs dramatically. 0% VAT ends in March 2027.
Smart Export Guarantee (SEG)
SEG ensures solar owners get paid for surplus energy they export to the grid. While there is no plans to end SEG, the rate can be decided by the supplier so current rates of 15p/kWh may not last. The longer you wait to install solar the higher the chance is that the SEG rate will reduce.
Local Authority Grants
Not all local authorities offer grants, but it may be worth checking if yours does. Some local authorities offer grants to small businesses and low income households for renewable technology upgrades.
Traditional Bank Loans and Personal Finance
For customers who prefer to work with their existing bank, standard personal loands remain an option. However, these often carry higher interest rates and shorter loan terms than dedicated Green Loans. They can still work well for smaller installations or battery storage add-ons, or customers who are looking to install several upgrades across different installers.
In-House Financing from Installers
Some renewable energy installers now offer in-house finance agreements through accredited lending partners. At SolarTherm UK we provide a simple, bundled solution with low APR and bespoke repayment terms suited to your budget, system size and expected system returns.
Payback Periods: What to Expect
Solar remains one of the most cost effective renewable energy investments available. Improved panel efficiency and lower equipment costs have shortened payback times significantly. Systems without a battery are now experiencing typical payback periods of 6-10 years, and with battery storage increasing it by an additional 2 years of 8-12 years.
Your payback period is influenced by a number of things from household electricity usage, export tariff rate, system size and orientation and whether battery storage is included.
Using a Green Energy Loan can smooth upfront costs, making the payback period feel shorter because financial benefits begin immediately.
Which Option is Right for You?
Choosing the best financing route depends on your goals.
- Minimising upfront costs: Green Energy Loan
- Maximising long term savings: outright purchase if funds allow
- Lowest monthly payment: longer term Green Energy Loan
- Fastest approval: installer provided finance
For most households, Green Energy Loans offer the strongest balance of affordability, predictable repayment and immediate energy savings.
Final Thoughts
Solar adoption in the UK continues accelerating, driven by falling prices, rising energy bills and accessible financing solutions. With energy prices remaining volatile, 2026 is a strategically strong year to evaluate solar upgrades.
Contact SolarTherm UK today for a free, no obligation quote and design, tailored to your property, usage and future energy needs. No hard sell, just honest, expert advice.
Your home. Your energy. Your future.
