UK renewable energy grants and incentives: the complete guide

The current landscape at a glance

The UK government has committed approximately £6.6 billion to energy efficiency and low-carbon heating between 2022 and 2028, spread across multiple schemes. Combined with the Smart Export Guarantee (market-based, not government-funded) and permanent 0% VAT on energy-saving materials, the total available support is significant — but navigating it requires understanding which schemes apply to your circumstances.

Boiler Upgrade Scheme (BUS)

- **What:** Upfront capital grant to replace fossil fuel heating with a heat pump or biomass boiler.

- **Amount:** £7,500 for air source or ground source heat pump. £5,000 for biomass boiler (rural properties only).

- **Scheme budget:** £1.5 billion through to 2028. Extended from original £450m (2022–2025) target.

- **Eligibility:** England and Wales. Must replace an existing fossil fuel system (gas, oil, LPG boiler, or electric heating). Property must have a valid EPC with no outstanding recommendations for loft or cavity wall insulation (you can get an exemption if these are not feasible). New builds excluded (except custom self-build). MCS-certified installer required.

- **How to apply:** Your installer applies on your behalf via the Ofgem BUS portal. A voucher is issued before installation; the installer claims the grant after commissioning. You never handle the money — the installer's quote is reduced by £7,500.

- **Uptake:** Approximately 40,000–50,000 vouchers redeemed by end of 2025. Slower than government targets (90,000 by 2025) but accelerating following the £7,500 uplift in October 2023.

0% VAT on energy-saving materials

- **What:** Zero-rate VAT on the supply and installation of qualifying energy-saving materials.

- **Applies to:** Solar panels, battery storage (when installed with solar), heat pumps (air and ground source), biomass boilers, insulation, solar thermal, micro-CHP, draught-proofing, and heating controls.

- **Duration:** Permanent — made indefinite in the 2023 Autumn Statement (had been a 5-year temporary measure from April 2022).

- **Value:** Saves £1,000–2,500 on a typical solar installation; £1,200–1,800 on a heat pump. The installer simply charges 0% VAT instead of 20% — it's automatic.

Energy Company Obligation (ECO4)

- **What:** Legal obligation on larger energy suppliers to fund energy efficiency improvements in fuel-poor and vulnerable households.

- **Budget:** Approximately £4 billion across the ECO4 obligation period (April 2022–March 2026, with expected extension).

- **Eligibility:** Households receiving certain means-tested benefits (Universal Credit, Pension Credit, Child Tax Credits, etc.) or referred via their Local Authority under 'LA Flex' (Local Authority Flexibility). LA Flex allows councils to set their own criteria — typically covering households with income under £31,000, in EPC D–G rated homes, or with a health condition exacerbated by cold living conditions.

- **Measures covered:** Loft, cavity, and solid wall insulation; first-time central heating; boiler replacement; heat pump installation; solar PV (as part of ECO4 Innovation measures — up to 10% of supplier obligation); heating controls.

- **Average grant:** £2,000–15,000 per property depending on measures. Completely free to eligible households.

Home Upgrade Grant (HUG2 / HUG3)

- **What:** Local authority-delivered scheme for off-gas-grid homes.

- **HUG2:** £630 million, April 2023–March 2025, 45 participating local authorities.

- **HUG3 (Phase 3):** Approximately £1 billion, 2025–2028.

- **Eligibility:** Off-gas-grid homes, EPC band D–G, household income under £31,000, or in a pre-qualified postcode area.

- **Measures:** Insulation, low-carbon heating (heat pumps), solar PV. Average grant per home: £10,000–20,000. Also free to eligible households.

Smart Export Guarantee (SEG)

Detailed in the dedicated SEG article above. Key numbers: 15–16.5p/kWh from the best suppliers (Octopus Outgoing Fixed, E.ON Next Export). £80–330/year for a typical 4kWp system depending on supplier. MCS certification and smart meter required.

Business-specific incentives

- **Full Expensing:** 100% first-year capital allowance on qualifying plant and machinery (including solar PV, battery storage, EV chargers, heat pumps for business premises). Made permanent in Spring Budget 2024. For every £100,000 invested, corporation tax saving of £25,000 (at 25% rate) in year one.

- **Climate Change Agreements (CCA):** 92% discount on Climate Change Levy for electricity, 88% for gas. Available to facilities in 53 qualifying sectors. Two phases extend to 2027. Annual reporting of energy efficiency against targets required.

- **Enhanced Capital Allowances (ECA):** 100% first-year allowance specifically for designated energy-saving equipment listed on the Energy Technology List. Separate from Full Expensing — still available for qualifying technologies including high-efficiency heat pumps, solar thermal, and CHP.

- **EV workplace charging:** Workplace Charging Scheme — up to £350 per socket, maximum 40 sockets (£14,000) per applicant business. Still available.

Devolved administration schemes

- **Scotland — Home Energy Scotland Loan:** Up to £7,500 interest-free for energy efficiency, plus £5,000 additional for renewables (solar, battery, heat pump) — total up to £12,500. Plus up to £6,000 for secondary measures. 10-year repayment term.

- **Scotland — Warmer Homes Scotland:** Free energy efficiency for fuel-poor households. Insulation, central heating, solar panels. Average grant £4,000–5,000. Managed by Warmworks.

- **Wales — Warm Homes Nest:** Free energy efficiency improvements for low-income households. Over £240 million invested since 2011. More grant-focused, less loan-based than Scotland.

- **Northern Ireland:** Affordable Warmth Scheme (up to £7,500 grant, income under £23,000). Boiler Replacement Scheme (up to £1,000, income under £40,000). NI has no BUS or ECO equivalent — acknowledged policy gap.

How to check eligibility across multiple schemes

Many households qualify for more than one scheme — but the application processes are separate. The most common combination: BUS (£7,500) for the heat pump + 0% VAT + ECO4 for insulation measures if income-qualifying.

Start by checking your EPC rating (at gov.uk/find-energy-certificate) and household benefit status. Then contact your local authority to check if they participate in LA Flex or HUG delivery. At Sunlit Solutions, we include a grant eligibility check with every consultation — we'll identify which schemes apply to your specific property, income, and planned installation.

Important: Grant rules change. Amounts, eligibility thresholds, and scheme availability are updated periodically by government. All figures in this article are current as of mid-2026 and should be verified before committing to an installation.