Is there VAT on solar panels in Scotland?

Solar panels and battery storage for domestic properties in Scotland qualify for 0% VAT until March 2027. This applies to both equipment and installation costs, effectively reducing total system cost by approximately 20%.

What grants are available for solar panels in Scotland?

The main funding scheme is Home Energy Scotland (HES) which offers interest-free loans up to £7,500 for solar panels and £6,000 for battery storage. Additional cashback grants may be available for eligible households through the HES scheme.

What is the Smart Export Guarantee?

The Smart Export Guarantee (SEG) requires energy suppliers with over 150,000 customers to offer payment for excess solar electricity exported to the grid. Rates vary by supplier, typically ranging from 4-15p per kWh exported.

Do I need to be on benefits to get solar funding in Scotland?

No, the 0% VAT rate and SEG apply to all homeowners. Home Energy Scotland loans are available regardless of income, though additional grants and cashback may be means-tested or linked to property EPC rating.

Solar Incentives & Funding in Scotland

Published: 01/08/2026

Last Updated: 02/07/2026

This guidance is reviewed periodically to reflect evolving renewable energy practices and current Scottish regulations.

What solar funding is available in Scotland?

You can access multiple funding sources for solar in Scotland: 0% VAT until March 2027 (saving around 20%), interest-free loans up to £7,500 for solar panels and £6,000 for batteries through Home Energy Scotland, and Smart Export Guarantee payments of 4-15p per kWh for electricity you export. Additional cashback grants up to £7,500 exist for eligible households.

0% VAT on Solar and Battery

Zero-Rate VAT Until March 2027

Solar panels and battery storage for domestic properties qualify for 0% VAT. This applies to both equipment and installation labour, effectively reducing total costs by approximately 20% compared to standard-rated goods.

Example Saving

£2,400-£3,600

On typical £12,000-£18,000 system

Current Status

Active

Confirmed until 31 March 2027

What Qualifies

Solar panel systems (any size)
Battery storage (standalone or with solar)
Hybrid inverters
Installation labour
Ancillary equipment (mounting, wiring)

Requirements

Residential property only
Installed by VAT-registered business
Property must be your residence
Completed before 31 March 2027
Commercial installations pay standard VAT

Home Energy Scotland Loans

Interest-Free Finance

Home Energy Scotland (HES) offers interest-free loans for energy efficiency improvements including solar panels and battery storage. This is a Scottish Government-funded scheme available to all Scottish homeowners.

Solar Panels

Up to £7,500

Interest-free loan for solar PV installation

Battery Storage

Up to £6,000

Interest-free loan for battery systems

Eligibility Criteria

Own your property (not renting)
Property is in Scotland
Main residence (not second home)
Use MCS-certified installer
No existing HES loan outstanding
Pass standard credit check

How to Apply

1Contact Home Energy Scotland on 0808 808 2282 for initial advice
2Receive quotes from MCS-certified installers
3Submit loan application with chosen quote
4Loan approved (typically 2-4 weeks)
5Installation completed, loan funds released to installer

Cashback Grants

Additional cashback grants of up to £1,500-£7,500 may be available for households meeting specific criteria (rural location, fuel poverty indicators, specific EPC ratings). Eligibility is assessed during the HES application process.

Smart Export Guarantee (SEG)

Payment for Exported Electricity

The Smart Export Guarantee requires licensed electricity suppliers with over 150,000 customers to offer a tariff paying for excess electricity exported to the grid. Rates and terms vary by supplier.

Typical SEG Rates (February 2026)

Standard fixed rate4-8p/kWh

Premium/tracker rates8-15p/kWh

Agile export (variable)0-35p/kWh

Rates change frequently. Check current offers before choosing a supplier.

SEG Requirements

MCS-certified installation
Smart meter (or agreed metering)
System under 5MW capacity
Apply to your chosen SEG supplier

Maximising Export Value

Using solar yourself beats exporting
Battery storage reduces exports
Variable tariffs can pay more at peak
Compare supplier rates annually

Other Support Schemes

ECO4 Scheme

The Energy Company Obligation (ECO4) funds energy efficiency measures for low-income households. Solar panels may be included as part of a broader efficiency package. Eligibility typically requires specific benefits or very low income.

Contact your energy supplier or local authority to check eligibility.

Warmer Homes Scotland

Scottish Government scheme providing free energy efficiency improvements to eligible households. Primarily focused on insulation and heating but may include solar in some circumstances.

Eligibility based on benefits received and property conditions.

Local Authority Schemes

Some Scottish councils operate additional energy efficiency programmes. These vary by area and may have specific eligibility criteria. Contact your local council for current schemes.

Bottom Line on Solar Funding

0% VAT until March 2027 saves you approximately 20% (£2,400-£3,600) on typical £12,000-£18,000 solar and battery systems installed for domestic properties
Interest-free loans through Home Energy Scotland provide up to £7,500 for solar panels and £6,000 for batteries, repayable over 5-10 years with no interest charges
Smart Export Guarantee pays 4-15p per kWh for exported electricity, though using your solar power directly saves more than exporting at these rates
Additional cashback grants of £1,500-£7,500 available for eligible households based on income, rural location, fuel poverty indicators, or low EPC ratings
You can combine multiple funding sources—0% VAT applies automatically while you can also use HES loans and receive SEG payments simultaneously
All schemes require MCS-certified installation, ensuring quality standards and protecting your investment with industry-backed warranties