UK Solar Grants and Energy Bills in 2026: What's Changed

The first few months of 2026 have brought major changes to the UK solar landscape — from £150 off energy bills to the end of ECO4 and the launch of a £15 billion replacement programme. Here's what's changed and what it means if you're considering solar panels.

What's Changed: A Quick Summary

£150 Off Energy Bills from April 2026

In her Autumn Budget 2025, Chancellor Rachel Reeves announced the government will cover 75% of the Renewables Obligation (RO) levy for three years (2026–2029). Combined with scrapping the ECO scheme from consumer bills, this delivers approximately £150 per year off the average household energy bill from April 2026.

The cost to the Treasury is around £2.3 billion. The RO levy was previously funded entirely by consumers through their electricity bills.

What are green levies?

Green levies are charges added to energy bills to fund renewable energy schemes, home insulation programmes, and low-carbon heating upgrades. They currently make up approximately 16% of the price of electricity and around 5.5% of the price of gas. The main components are:

• Renewables Obligation (RO): funds renewable electricity generation — the largest levy, now 75% covered by government
• Contracts for Difference (CfD): supports newer renewable energy projects at guaranteed prices
• Warm Home Discount: £150 rebate for vulnerable households

The political context

Energy bills have become a political flashpoint. Reform UK has proposed scrapping all green levies and VAT on energy entirely, claiming this would save households around £200 per year. The debate is likely to intensify, but for now, the £150 RO levy reduction is confirmed and taking effect.

ECO4 Has Ended — What Replaces It?

The ECO4 scheme (Energy Company Obligation) ended on 31 March 2026. Since April 2022, it had provided free solar panels, insulation, and heating upgrades to low-income households, funded by large energy suppliers.

The government confirmed in January 2026 that ECO4 will not be extended. Instead, it has been replaced by the Warm Homes Plan.

The Warm Homes Plan

Announced in January 2026, the Warm Homes Plan commits £15 billion of public investment to upgrade up to 5 million homes by 2030. It provides grants and interest-free loans for solar panels, battery storage, insulation, and heat pumps through three delivery routes:

• Warm Homes: Local Grant (England) — replaces the Local Authority Delivery scheme
• Warm Homes Nest (Wales) — can fund up to 100% of installation costs for eligible households
• Warmer Homes Scotland — continuing programme for qualifying households

The Energy Secretary has indicated the Warm Homes Plan will be accelerated in response to the Middle East conflict, with new grants and interest-free loans expected soon.

Is Solar Still Worth It with £150 Off Energy Bills?

Yes, absolutely. This is an important point that can easily be misunderstood. The £150 reduction comes from the government picking up part of the green levy tab — it does not mean wholesale electricity prices have fallen.

Solar panel savings come from avoiding the 24–30p/kWh you pay for grid electricity. Whether that 24–30p includes a levy or not makes no difference to your solar savings calculation. Every kilowatt-hour your panels generate is still worth 24–30p in avoided costs.

If anything, the growing instability in global energy markets (driven by the Middle East conflict) makes energy independence more valuable, not less. Solar panels lock in your electricity cost at £0 for 25+ years. That certainty is worth a lot when prices are volatile.

Other Incentives That Haven't Changed

0% VAT on solar installations

The 0% VAT rate on residential solar panel and battery installations continues and is confirmed until at least March 2027. This saves approximately £1,000–£1,400 on a typical system compared to the standard 20% rate. See our full solar incentives guide.

Smart Export Guarantee (SEG)

The SEG continues to pay 3–15p/kWh for surplus electricity exported to the grid. You need an MCS-certified installer and a smart meter to qualify.

HUG2 (Home Upgrade Grant)

HUG2 continues to offer up to £10,000 for off-gas-grid homes with an EPC rating of D–G and household income under £31,000.

Boiler Upgrade Scheme

The BUS voucher of £7,500 towards heat pump installation continues until March 2028.

UK Solar Market: Record Growth in 2026

The UK solar market is forecast to grow by 50% year-on-year for the second consecutive year, adding 5–5.5 GW of capacity in 2026 — comfortably the best year on record. Total installed capacity is reaching approximately 21 GW.

The industry now employs over 60,000 professionals, with the Department for Energy Security and Net Zero expecting this to double by 2030. Residential rooftop installations are growing by around 20%.

What Should You Do Now?

• Considering solar? The financial case is as strong as ever. 0% VAT, SEG payments, and volatile energy prices mean payback periods of 6–8 years, with 25+ years of savings after that. Get quotes from MCS-certified installers.
• Were you planning to apply for ECO4? Check your eligibility for the Warm Homes Plan instead. Contact your local authority for details on the Warm Homes: Local Grant.
• Renter or flat owner? Plug-in solar panels will soon be available once regulations are finalised. Read our plug-in solar guide.
• Already have solar? Nothing changes for you — your system continues generating savings. Check if you're on the best SEG tariff, as competition between suppliers is increasing.

Frequently Asked Questions

Will my energy bill actually go down by £150?

The £150 figure is based on the average household. Your actual saving depends on your energy usage. The reduction comes from the government covering 75% of the Renewables Obligation levy, which is applied to electricity bills. If you use more electricity than average, you'll save more; if less, you'll save less.

Does the £150 bill reduction make solar less worthwhile?

No. Solar savings come from generating your own electricity instead of buying it at 24–30p/kWh. The levy reduction doesn't change this fundamental equation. Your panels still save you the same amount per kilowatt-hour generated.

What happened to ECO4?

ECO4 ended on 31 March 2026 after running since April 2022. It provided free energy efficiency measures (including solar panels) to low-income households. It has been replaced by the Warm Homes Plan, a £15 billion programme with similar aims but broader scope.

Can I still get free solar panels?

Potentially, through the Warm Homes Plan. Eligibility criteria are similar to ECO4 — low-income households with poor energy efficiency ratings are most likely to qualify. Contact your local authority to check availability. See our ECO4 and Warm Homes Plan guide.

Is 0% VAT on solar ending?

The 0% VAT rate is confirmed until at least March 2027. There is no indication it will be removed — the government has been supportive of solar and the policy has cross-party backing.