One of the questions we get asked most often is whether there’s any government funding available to help with the cost of commercial solar installation. It’s a fair question – solar is a meaningful investment, and if there’s financial support available, you want to know about it before you commit.
The short answer is yes, there are options. But the landscape of solar panel grants for businesses in the UK is more nuanced than many websites suggest, and it’s changed significantly over the past few years. Some schemes that used to exist are no longer available. Others have changed in scope. And some genuinely useful funding routes don’t get mentioned nearly as often as they should.
This article gives you a clear, current picture of what’s available, what’s changed, and how to approach funding if you’re a UK business looking at commercial solar.
- First, Let’s Be Clear About What “Grants” Actually Means
The word “grant” gets thrown around a lot in solar marketing, and it’s worth being precise about what it means.
A true grant is money you receive that you don’t have to pay back. There are genuine grant schemes available for commercial solar in certain circumstances, but they’re not universal – eligibility depends on factors like your location, business type, and the specific scheme criteria.
Beyond outright grants, there are several other forms of financial support worth knowing about:
- Subsidised funding and low-interest loans through government-backed schemes
- Tax incentives that reduce the effective cost of installation
- Export payments that generate ongoing income from your system
- Energy efficiency grants that can be used alongside solar
We’ll go through each of these. But let’s start with the actual grant schemes.
- The UK Shared Prosperity Fund (UKSPF)
The UK Shared Prosperity Fund is one of the main routes through which businesses in certain areas of the UK can access grant funding for energy efficiency improvements, including commercial solar.
Delivered through local authorities and combined authorities, UKSPF allocates funding across different regions, with priorities set locally. In many areas, solar panel installation for businesses falls within the scope of eligible projects.
The amounts available vary. Some schemes offer grants covering 20-40% of project costs, up to a defined cap. Others offer different structures depending on business size, sector, or location.
The key thing to understand about UKSPF is that it’s administered locally. To find out what’s available in your area, you need to contact your local authority, local enterprise partnership (LEP), or Growth Hub. Schemes open and close at different times, and what’s available in Yorkshire might be completely different from what’s on offer in the South West.
Excel Energy works with businesses across the UK, and we can help you identify whether there are active UKSPF-backed schemes in your region at the time you’re looking to install.
- The Industrial Energy Transformation Fund (IETF)
For larger businesses with significant energy consumption, the Industrial Energy Transformation Fund is worth investigating. Run by the Department for Energy Security and Net Zero, the IETF supports energy-intensive businesses in reducing their energy use and transitioning to lower-carbon alternatives.
Solar isn’t always the primary focus of IETF applications, but it can be included as part of a broader energy efficiency project. The fund operates in phases, with grant funding available for both feasibility studies and deployment projects.
Eligibility tends to focus on larger industrial and manufacturing businesses with substantial energy bills. If your business is spending several hundred thousand pounds a year on electricity, this is a scheme worth exploring properly.
- ECO4 and Commercial Properties
The Energy Company Obligation (ECO4) scheme is primarily aimed at domestic properties, but it’s worth mentioning because there’s sometimes confusion about whether commercial buildings qualify. In most cases, they don’t – ECO4 is designed for residential properties, not business premises.
If you also own or manage residential properties alongside your commercial operations – such as agricultural businesses with farm worker accommodation – there may be a crossover worth exploring.
- Capital Allowances: The Tax Benefit That Often Gets Overlooked
This isn’t a grant, but it’s financially significant enough that every business owner should understand it before making a decision about commercial solar.
Under the UK’s capital allowances system, businesses can deduct qualifying capital expenditure from their taxable profits. Commercial solar installations typically qualify as plant and machinery for capital allowances purposes.
The Annual Investment Allowance (AIA) currently allows businesses to deduct up to £1 million of qualifying investment from taxable profits in the year of purchase – meaning the full cost of most commercial solar installations can be offset against your tax bill in year one.
For a business paying corporation tax at 25%, a £150,000 solar installation could reduce your tax bill by £37,500 in the first year. That’s a substantial effective discount on the cost of the system, and it’s available to virtually all UK businesses, not just those in specific regions or sectors.
Speak to your accountant about how this applies to your situation, and make sure your solar installer is providing the right documentation to support your capital allowances claim.
- Smart Export Guarantee: Getting Paid for Surplus Power
Once your commercial solar system is installed, any electricity you generate but don’t consume on-site can be exported to the national grid. The Smart Export Guarantee (SEG) requires licensed energy suppliers to offer payments for this exported electricity.
Rates vary by supplier and tariff, but you’re typically looking at 3p-15p per kWh for exported power. For businesses with large systems that export a meaningful proportion of their generation, this adds a useful ongoing income stream.
It’s worth noting that commercial users typically export less than domestic users – because your daytime consumption tends to be high, you’ll use most of what you generate. But any export payment adds to your overall return.
To benefit from the SEG, your system needs to be MCS-certified, and you’ll need a smart meter. Your installer should advise you on this as part of the installation process.
- Green Business Loans and Finance
If upfront cost is the main barrier to installing commercial solar, finance can bridge the gap without you needing to wait for grant funding.
Several banks and specialist lenders offer green business loans specifically for renewable energy projects. Interest rates on these loans are often lower than standard commercial lending, and in some cases, the monthly repayments are lower than your current electricity bill savings – meaning the system pays for itself from day one in cash flow terms.
The British Business Bank has also supported various green finance initiatives over the years, and some local authorities and LEPs offer their own loan schemes for energy efficiency investment.
If you’d rather not commit significant capital upfront, Power Purchase Agreements (PPAs) are another option. Under a PPA, a third party installs solar panels on your building at no upfront cost, and you agree to buy the electricity generated at a fixed rate – typically below market price. You don’t own the system, but you benefit from cheaper electricity without the capital outlay.
- Agricultural Businesses: Solar Panel Grants Through Countryside Stewardship and SSAFO
If your business is agricultural, there are additional funding routes worth exploring. The Countryside Stewardship scheme and the Farming Investment Fund have both included elements that support on-farm renewable energy in various rounds of funding.
Solar panels for agricultural buildings – barns, grain stores, polytunnels – can sometimes qualify for support through these schemes. Funding rounds open periodically, and competition for places can be high, so it’s worth keeping an eye on what’s available and applying promptly when a relevant scheme opens.
Natural England and the Rural Payments Agency are the main bodies to contact for agricultural grant enquiries.
- How to Find Out What’s Available for Your Business
Because grant schemes are regionally administered and change over time, the most reliable approach is to check directly with the relevant bodies rather than relying on information that may already be out of date.
Here’s a practical starting point:
- Contact your local Growth Hub – these are free business support organisations funded by central government, and they can tell you what funding is currently available in your area.
- Check the Business Energy and Industrial Strategy (BEIS) database of current grant schemes.
- Speak to your local authority – particularly if you’re in a rural area or a region with active devolved funding.
- Talk to us – at Excel Energy, we deal with commercial solar funding questions regularly. We can help you identify what you might be eligible for and make sure your installation is structured in a way that supports any funding applications.
- Don’t Wait for a Grant That Might Not Come
Here’s the honest reality: grant funding for commercial solar is not available to every business in every location. If you spend months waiting for a scheme that isn’t open in your area, you’re delaying your installation and continuing to pay full price for grid electricity in the meantime.
For most businesses, the combination of capital allowances, energy bill savings, and export payments already makes commercial solar a financially strong investment – even without a grant. A grant is a welcome bonus, not a prerequisite.
If you’d like a clear picture of what commercial solar would cost your business, what you’d save, and what funding might be available to you, the team at Excelenergy.co.uk is here to help. We give you straight answers, not sales spin.
Excel Energy – Commercial Solar Installers Speak to our team today about solar panel grants and funding options for your business.
