History of solar panel grants and schemes
The solar industry and transformed on several occasions over the past decade, mainly driven by government grants, subsidies and falling prices.
Schemes that have impacted the solar industry and wider renewable energy industry include:
- Feed-in Tariff
- Renewable Obligation Certificate
- Smart Export Guarantee
- Solar Farms
- Rent A Roof Schemes
For specific information relating to subsidies and grants, contact our expert team at SolarTherm UK.
Rent a roof scheme
The rent a roof scheme became very popular for several years offering homeowners the ability to get solar panels without having to outlay the initial investment. Instead, homeowners would ‘rent their roof’ to companies for a fixed term (typically 25 years) whereby the company would outlay the initial investment and in return would keep any subsequent subsidy or FIT payments. While the scheme gained popularity it also came with several issues, including complications with homeowners selling their property and complications with homeowners getting a mortgage on properties with a ‘rent a roof scheme. Coupled with a reduction of feed-in tariff subsidies, the rent a roof scheme decreased in popularity due to the longer payback period.
Between 2013 – 2015, solar farms quickly grew in popularity across the UK. Fuelled by potential energy earnings from land near power lines versus average earnings from agriculture and pastoral farming, landowners quickly saw the opportunity to quadruple their earnings per acre. Solar farms slowly ground to a halt due to the expensive nature of connecting solar farms to the grid, coupled with the government withdrawing the renewable obligation certificate which guaranteed solar farm owners a set price for electricity produced.
The Feed-in Tariff
The feed-in tariff (FIT) scheme was introduced in April 2010 as a government programme designed to increase the uptake of both renewable energy and low-carbon electricity generation schemes, such as solar panels.
The scheme enabled owners of electricity generating technology to feed excess electricity back to the grid and get paid for the electricity exported. Technology included the below:
- Solar panels (Solar PV)
- Wind turbines
- Hydro turbines
- Anaerobic digestion
- Micro-combined heat and power (micro-CHP)
The FIT scheme closed to new applicants on the 1st April 2019 after 9 years of operation. The FIT scheme made way for the new smart export scheme, the new government-backed initiative.
The Smart Export Guarantee
The Smart Export Guarantee, otherwise known as SEG, was launched on 1st January 2020, replacing the feed-in tariff (FIT) scheme. Similar to that of the FIT scheme, the SEG pays owners of qualifying electricity-generating technology for the energy they export back to the grid. Unlike the FIT scheme, the SEG scheme allows the owner to choose a tariff, typically dependent on your energy supplier.
How does SEG and FIT compare?
With the recent change between the FIT and SEG schemes, some homeowners can struggle to understand the difference between the schemes. We’ve put together a simple table to differentiate the two schemes:
|Feed-in Tariff (FIT)||Smart Export Guarantee (SEG)|
|Available tariffs||Set by Ofcom, all applicants are on the same tariff, regardless of energy supplier.||Tariffs vary according to energy suppliers and owners can move between various tariffs.|
|Installer certification criteria||MCS Certification||MCS Certification or equivalent|
|Scheme funding||FIT payments were paid as a levy on the owner’s electricity bills.||SEG is paid by energy companies that buy the exported power.|
|Payment calculations||Payment is generally made based on an estimated 50% of the power generated.||Exported power is metered by a smart meter.|
Free Solar Panel Schemes
Otherwise known as the ECO3 (Energy Company Obligation) funding, the scheme is focused on reducing fuel poverty for low-income families and households in England. The scheme is set to close on the 31st March 2022.
Set by the Energy Company Obligation, laws are placed on larger energy suppliers to deliver energy efficiency to domestic premises. In order to qualify for the scheme, a member within your household must qualify for a benefit such as income support, child benefit, disability living allowance, PIP, child tax credits, universal credits, carers allowance, war pension and several others.
Cost savings on Solar Panels
Over the past decade, solar panel prices have decreased between 60-65%, making solar panels a more viable and lucrative investment, not to mention the added benefit of reducing your carbon footprint. This reduction in price has meant that the payback period to breaking evening and making additional savings from your solar panels has never been better.
VAT on Solar Panels
As of 1st April 2022, the government will be cutting VAT from 5% to 0% on energy-saving materials such as solar panels, until 31st March 2027. Known as the ‘green tax cut’, to help with the rapidly increasing cost of electricity, the tax cut will help make moving to renewable energy technology more attractive and help offset the cost by reducing reliance on gas and electricity from the grid.
Renewable Heat Incentive Scheme
The Renewable Heat Incentive, otherwise known as the RHI, closes to new applicants on the 31st March 2022. The RHI scheme can be claimed against the installation of biomass boilers, solar water heating (solar thermal panels or evacuated tubes) & qualifying heat pumps. Payments from the RHI are made over the course of 7-years and vary in accordance with energy production from the system installed.
SolarTherm UK Solar Installer
At SolarTherm UK, our team of renewable energy experts can offer advice based on the latest information to ensure you’re maximising your investment. On all installations, our team will conduct a feasibility study so owners can understand the amount of time it’ll take to break even from the initial investment, as well as potential earnings that can be made above and beyond that.
Our expert installers have installed thousands of renewable energy products across the country, with customer service and quality always being at the forefront of any installation.