Solar Thermal Grants
When planning how you buy your solar thermal there are different funding offers available. If you are unsure about installing solar panels read our article for more information
The Green Homes Grant
To help cover the initial cost of installing solar thermal, you can apply for the Green Homes Grant. It is important to note that the grant does not cover solar PV. The grant will cover 2/3 of the cost of installation up to £5,000. For houses on low income this can rise to 100% up to £10,000. The grant is given in the form of vouchers to be spent with qualifying suppliers and cover material, installation and VAT. Check whether you’re eligible here.
You must redeem the vouchers and ensure improvements are completed by 31 March 2022.
The RHI Scheme
If you choose to install solar thermal in your home, you could be eligible to receive payments from the government through the RHI scheme. It is important to note that the scheme is only for solar thermal and not solar PV. Below are some key parts of the scheme:
To aid with the upfront cost of installing a heat pump The Department for Business, Energy & Industrial Strategy have introduced the 'Assignment of Rights'. This works by an investor footing the upfront cost and the subsequent RHI payments going to the investor rather than the owner. It is possible to use this and the Green Homes Grant to cover a large chunk of the upfront cost, however, you won’t receive much if any at all of the RHI payments.
Solar thermal must be designed and installed only to provide heating for domestic hot water. Space heating and heating a swimming pool will not be eligible.
Solar thermal systems don’t require any metering for payment or performance in any situation.
These are the top-level parts of the scheme. Before investing in a solar thermal or applying for the scheme we recommend you read Ofgem's Essential Guide for Applicants.
Examples of the schemes
In the below calculations the numbers will differ for each unique situation. The following assumptions have been made for solar thermal for a semi-detached three-bedroom house:
We have assumed that you will pay £5,000 for your solar thermal (materials, labour and VAT). Cost will vary considerably with the system purchased and installation charge so do get a full quotation.
We have assumed you will receive £3,333 from the Green Homes Grant.
We have assumed a total return of £1,540 over 7 years in RHI payments. This is for a south-facing roof with little shading. You can work out a more accurate estimate for your specific house using your EPC certificate here, and input this into the calculations below for a more accurate calculation.
Green Homes Grant
Solar thermal installation = £5,000 - £3,333 (Green Homes Grant)
You pay £1,667 upfront but bills will be cheaper and it could increase the value of your property, eventually offsetting this price.
RHI scheme – you pay the price of the solar thermal and receive all of the RHI payments over the next seven years. As you will see from the example below you end up paying a lot more for system so we don’t recommend this option unless the RHI payments for your property are more than what you would receive from the Green Homes Grant:
Solar thermal installation = £5,000 (paid by you upfront)
£1,540 paid to you quarterly over 7 years through the RHI scheme.
Total cost of £3460 paid, but bills will be cheaper and it could increase the value of your property, eventually offsetting this price.
The Green Homes Grants + RHI | Assignment of Rights + RHI | The Green Homes Grant + RHI + Assignment of Rights – for all three of these combinations, unless your RHI payments work out higher than the Green Homes Grant there is no point combining.