Solar Panel Grants and Funding For Businesses

As we try to reduce our dependence on fossil fuels to create 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 can come with 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 and maintenance once they’re installed is fairly straightforward and inexpensive while, 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 will differ in their specifics from provider to provider, but broadly speaking at the highest level 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 being able to secure 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 and 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 itself. As we’ve seen all too clearly over the last couple of years, our ongoing dependence on fossil fuels makes us hostages to fortune right now, and that’s before we even consider the fact that they will run out one day. The exact financial savings that you could make will vary considerably depending on several different factors, but these benefits could be significant. 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 is a central pillar of the UK Government’s Levelling Up agenda and provides £2.6 billion of funding for local investment by March 2025. The Fund aims to improve pride in place and increase life chances across the UK 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 will be to your benefit to check with your local authority to see what they are offering at the moment. One such programme is the Net Zero Grant Project (NZGP), which has been running in Birmingham and Solihull since March 2023. The NZGP’s aims are 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 for them has matured extremely quickly, meaning that prices have already substantially reduced and money is already being diverted elsewhere. For this example, we’ll use the Renewable Energy Hub’s Free Solar Panels for Businesses Programme.

1. Explore and find the right funding for your business needs, and check your eligibility carefully for the funding as the requirements 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 queries 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 relating to your business will be important to 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?

There are! 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 to this, solar products are zero-rated for VAT. 

In addition to this, the Government’s post-COVID stimulation package, “The 130% Super-Deduction and the 50% First Year Allowance”, operated from 1st April 2021 to 31st March 2023. Only the latter part of the package applies to solar panel installations, as solar panels are classed as “Special Rate Assets”.

Under the 50% First Year Allowance scheme, companies can deduct half the value of new solar panel installations from their profits in the first year of installation, thus reducing their Corporation Tax bill. The remaining 50% will be written down at 6% in subsequent years. Previously, solar panels only qualified for the 6% special rate writing down allowance. Although the 50% First Year Allowance was due to end on 31st March 2023, the 2023 Spring Budget extended the allowance for a further three years until 31st March 2026. 

All UK businesses that pay Corporation Tax can also benefit from the current tax incentives as long as 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. 

Moving to solar energy isn’t just about protecting the planet. There are some serious financial incentives for you to do so, and that’s 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. But as we’ve seen, there are already fewer grants available now than there used to be, so if you’re thinking of making this change, the right time to do so is now!