Solar Panel Grants and Funding For Businesses

As we try to reduce our dependence on fossil fuels to generate the energy that we need, innovative solutions have come into the marketplace. One of the most important has been solar power, which harnesses the huge amount of energy produced by the sun to produce our electricity. 

For businesses, switching to solar energy can offer significant benefits. The environmental impact of making such a move is undeniable, but there can also be benefits for your business. Cost savings through reduced energy bills could significantly improve your bottom line. Plus, maintenance once they’re installed is fairly straightforward and inexpensive. At a time when both businesses and consumers are more environmentally conscious than ever, there’s no better way of promoting your business’s commitment to our planet than by installing solar panels to power it.

One of the biggest downsides of this technology can be the start-up costs. Solar panels have dropped in price significantly in recent years, but it can still cost thousands of pounds to deliver a state-of-the-art solar system. But the good news there is that there remains an array of grants and other funding options which can help your business to take advantage of the opportunities afforded by solar technology.

What Are the Eligibility Criteria for Business Solar Panel Grants?

Eligibility criteria for business solar panel grants will differ in their specifics from provider to provider. But broadly speaking, what you may be eligible for will boil down to the size of your business, the geographical location of your business, and the sector in which your business is involved. Some may also have specific criteria related to the exact dimensions of your premises.

Smaller and medium-sized businesses will find that they have greater eligibility. Not only are they easier to provide solar panels for, but they are also the businesses the most likely to potentially struggle with the upfront investment required to install them. Your geographical location is important because many of these grants are offered by locally-based organisations that will only approve applications from within their local area. The sector matters because not all business sectors are created equal, and some may require more support than others. 

Benefits of Solar Panel Grants for Businesses

The biggest single benefit of securing a solar panel grant or another form of preferentially priced plan is to minimise those upfront costs. Few business owners would argue that sustainability isn’t going to be a big part of our collective business future. But it’s important that these moves are made now, as many smaller business owners could struggle to get them installed without financial incentives.

But the benefits are very real - and not only for our planet. As we’ve seen all too clearly over the last couple of years, our ongoing dependence on fossil fuels makes us hostages to fortune, and that’s before we even consider the fact that they will one day run out. The good news is that change is on the way. The latest UK government data shows that renewable energy generation continues to break records, supplying 52.5 per cent of the country’s electricity in 2025. The exact financial savings you could make will vary considerably, but they can be significant. So not only is solar about sustainability, but you could make long-term financial savings as well.

Types of Solar Panel Grants for Businesses

There are various grant programmes relating to renewable energy across the UK, run on both a national and local level. The UK Shared Prosperity Fund was a central pillar of the UK Government’s Levelling Up agenda, providing £2.6 billion for local investment up to March 2026. It has since been succeeded by new funding streams, including the Local Growth Fund and Pride in Place Programme. The Fund aimed to improve pride in place and increase life chances across the UK by investing in communities and places, supporting local business, and people and skills.

Many local councils, for example, offer grants to local SMEs to help them make such transitions, and it is worth checking with your local authority to see what they are offering. One such programme was the Net Zero Grant Project (NZGP), which ran in Birmingham and Solihull from March 2023. As an example of local council support, the NZGP’s aims were threefold:

• To support decarbonisation and improve the natural environment whilst growing the local economy.

• To deliver effective decarbonisation in line with the Government's legally binding climate target.

• To provide immediate support to businesses so that they can deliver on net zero and in so doing enhance their competitiveness and sustainability. 

To be eligible for this particular grant programme, a business needs to be:

• An SME that has been actively trading for 6 months or more or a start-up based in Birmingham or Solihull. 

• Able to provide evidence that the business has been registered and provide full financial accounts, or a robust Business Plan (including financial forecasts) if they’ve been trading for 12 months or less, able to deliver the project in 3 months following receipt of the offer of a grant.

• Able to provide a cash match and able to obtain a minimum of 3 competitive quotes for each item above £2,499 in value. 

Most importantly of all, they need to either have had an energy efficiency assessment to evidence the environmental savings that will be achieved, or registered for a free energy audit before completing a NZGP application. This particular scheme has substantial documentation which explores what is necessary in greater detail.  

How to Apply for Business Solar Panel Grants

Business solar panel grants are not as common as they used to be, in no small part because the market has matured extremely quickly. This means that prices have already substantially reduced, and funding is often diverted elsewhere. However, it is still useful to understand the typical application process so you can be prepared. The process can generally be broken down into six steps:

1. Explore and find the right funding for your business needs, and check your eligibility carefully for the funding. This is because requirements can vary for each type of fund.

2. Obtain and read any guidance notes for the specific grant that interests you. Should you have any queries at this point, most programmes welcome questions and will be happy to clarify your eligibility and what you need to do to apply.

3. Build a supporting case. If you can demonstrate the benefits that will come from your application should it be approved, then all the better. You may need to carry out a full energy audit first. 

4. Collect together the relevant forms and documents that you need to complete your application. Bear in mind that supporting documents related to your business will be important in assessing whether you should be accepted. You may need, for example, proof that you have the right to install solar panels on the roof of your premises, or to provide a business plan if your business hasn’t been trading for long. Make sure that all of this is confirmed before you start your application. 

5. Make a note of any deadlines and keep those dates in the forefront of your mind. These will likely be strictly enforced, and late applications for time-limited programmes are unlikely to be accepted. 

6. Complete your application and provide any required supporting documents. 

Ensuring that you are applying for an appropriate programme and having all your ducks in a row in advance are the keys to making a successful application. And if your application is rejected, make sure that you understand fully why this was the case. It may be that you’ll be able to reapply at a later point, or there may be competitively-priced financing options through Power Purchase Agreements, such as this one through Solarsense.  

Are There Tax Incentives or Rebates Available for Solar Panel Installations?

Yes, there are tax incentives and rebates available for solar panel installations. For those with a solar PV system who generate more power than they need, the surplus can be ‘sold’ back onto the national grid under the Smart Export Guarantee, with electricity suppliers offering payment for each unit of power they export back. In addition, whilst the installation of solar panels on residential and charitable properties benefits from a temporary 0% VAT rate until 31 March 2027, standard 20% VAT applies to most commercial installations. However, a VAT-registered business can usually reclaim this amount through its VAT returns.

The ‘super-deduction’ scheme, which offered a 130% allowance, ended on 31 March 2023. It was replaced by a permanent policy of ‘full expensing’. However, because solar panels are classified as ‘special rate’ assets, they do not qualify for 100% full expensing.

Instead, a company investing in new solar panels can typically claim a 50% first-year allowance (FYA). This allows you to deduct half of the asset’s value from your profits in the year of purchase to reduce your Corporation Tax bill. The remaining balance is then added to the special rate pool to be written down at 6% in subsequent years. Alternatively, your business may be able to claim 100% of the cost under the Annual Investment Allowance (AIA), which has a generous limit of £1 million. As capital allowances can be complex, you should always check the current position with your accountant.

All UK businesses that pay Corporation Tax can also benefit from the current tax incentives, provided they are legally entitled to install solar equipment. To qualify, your solar panel system must be fixed on your property to generate electricity to power your business. Tax relief on your solar equipment is claimed via your annual Company Tax Return. It’s worth keeping in mind that the claim must be submitted for the accounting period in which you bought the equipment.

One word of caution: be wary of ‘free solar panel’ or rent-a-roof offers. These are usually power purchase agreements (PPAs), where a provider installs and owns the panels on your roof and sells you the electricity they generate. You avoid the upfront cost, but you don’t own the system, the long-term savings are typically smaller than buying outright, and the arrangement can complicate a future sale or lease of your property. Always read the terms carefully and weigh them against the cost of owning a system before committing.

Moving to solar energy isn’t just about protecting the planet. There are some serious financial incentives for you to do so. This is before you even consider the reputational enhancement you’ll get from making your commitment to the environment and the savings to your bottom line from reducing your energy bills. So if you’re considering making this change, the right time to do so is now.