VAT Cut to Zero on Insulation, Heat Pumps and Solar Panels for Five Years

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Chancellor Rishi Sunak announced that VAT on the installation of energy efficient systems would be cut from 5% to zero from April in his Spring Statement. The cut to VAT for the next five years covers the installation of technologies such as solar panels, heat pumps and insulation.

In his address to the House of Commons Rishi Sunak said that a household installing a solar panel system on their homes would see over £1,000 in tax savings and savings on their energy bill of over £300 per year.

This measure is welcomed by the renewable energy industry at a time when many more households and businesses are considering alternative ways to power their homes. The energy price crisis, the Russian invasion of Ukraine and the effects on the global energy market have led to soaring utility bills. There have been many calls on the government to introduce ways to help households & businesses with the rising cost of energy.

Commercial and industrial solar also received a boost as changes to business rates relief for green technologies were brought forward by a year to support SMEs at this time of high-power prices. There will now be no business rates on a range of green technologies including solar panels and batteries from April 2022. Eligible heat networks will now also receive 100% relief. According to the government, these measures will collectively save businesses more than £200 million over the next 5 years.

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Despite several Conservative MPs writing to the Chancellor a week before his Spring Statement urging him to focus on the retrofit of UK homes, he fell short of announcing a wholescale and much demanded reduction of VAT on all refurbishment work. The cutting of VAT on refurbishment to 5% or below is one of three demands of the AJ Retrofirst campaign led by the Architects Journal which is calling for retrofit to be prioritised over demolition and rebuild.

Former Royal Institute of British Architects’ (RIBA) president and principal at Perkins & Will, Sunand Prasad said:

“With nearly 20 per cent of the UK’s emissions used to power Britain’s antiquated housing stock, there is no doubt we are reaching boiling point when it comes to creating energy-efficient homes. This battle to retrofit our homes is not only vital to combat the climate emergency. It will also help families across the country save on skyrocketing energy bills.

We strongly welcome the cut to VAT on energy-saving materials announced today and we urge the government to continue prioritising energy efficiency to level up the entire country towards a greener future.”

Many of the changes that key green groups have been calling for have not yet been addressed, in part due to further delays to the publication of the new energy security strategy.

Cara Jenkinson, Cities Manager at Ashden, sustainable energy and development charity commented:

“If the government really wants to build a stronger and more secure economy and tackle the cost-of-living crisis then then they must invest now in training thousands of people to roll out an urgent nationwide campaign of energy efficiency measures, such as retrofitting housing, and installing heat pumps. The cut to VAT on these measures is welcome, but not enough to drive the scale of change needed.”


The Chancellor said that the aim of the VAT cut is not only to help households improve energy efficiency and keep energy costs down but to support the UK’s long-term net zero ambitions.

There are many households that will be able to benefit from zero VAT on energy efficient measures. Currently, an average UK home can expect to pay between £4,000 to £8,000 for installing solar panels and between £8,000 and £14,000 for an air source heat pump system.

The Energy Saving Trust has previously estimated that it would take the average household between 9 and 17 years to recoup the cost of solar panels but with the energy cap increases this time period will fall as costs for using electricity from the National Grid continues to rise.

Unfortunately, no new skills policy has been introduced, only a promise to review the apprenticeship levy. A significant increase in the upskilling of the existing construction workforce and investment in colleges to train a new generation of builders and heat engineers, is required if the UK is to ramp-up the home energy retrofit to protect people from rising energy prices and create a greener Britain.

However, there is no doubt with the current global situation around energy prices this is a great time to invest in clean renewable energy that will, in the future, protect homes from the volatility of the energy market. The VAT on renewables was 5%, which was already low, but reducing that to zero will potentially help people to cut their energy bills and incentivise them to make energy efficient choices for their homes.

We are at the starting line in the race to create a green and clean future in the UK. Many more incentives will be needed to make this a reality.

The Opportunities and Setbacks of Solar Power

Solar Panels Field

The solar industry is primed for growth. Solar power is the most abundant resource on Earth and is effectively unlimited. Low-carbon electricity generation must be increased substantially in the next decades if the U.K. wants to reach net-zero by 2050.

Alternative energy solutions help reduce greenhouse gasses and stabilize global temperatures. Questions are now being raised about the potential problems solar panels – or photovoltaic panels – create. With all things going green, how green are they really during production, or when they reach the end of their shelf life?

Efficiency and Intensity of Solar Power

There have been many advancements in the technology used in solar panels, but there is still plenty of room to improve.

The efficiency rating of a solar panel refers to how much available energy the panel can convert into electricity, and at the moment, that’s sitting around 17-19%. That means 83-81% of the potential energy is going to waste. If experts could improve this efficiency, it would mean lower costs for manufacturers, retailers, and consumers because fewer panels would be needed for the same amount of power.

The intensity of solar has also been questioned, with the amount of energy provided by the sun varying by region and time of year. Even in sunny areas, the panels can only generate power for a maximum of 12 hours a day, with their efficiency peaking at midday. This leaves further room for improvement, whether with storage batteries or panels that follow the sun to extend energy production.

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As the industry expands, advancements come at a more rapid pace. The introduction of diamond wire resulted in thinner solar cells, making them cheaper to produce and transport. Passivated emitter rear-cell technology likewise delivers improvements by reflecting the unabsorbed light, converting more of it into power.

Environmental Impacts

In one and a half hours, the sun’s energy that reaches Earth exceeds yearly worldwide energy consumption. However, one of the biggest concerns around solar is the land needed for large-scale operations. This could result in further habitat loss for plant and animal species.

With the impact of global warming on the environment, wild species extinction is already a significant concern and will only be exasperated. If experts can improve the efficiency of the technology, fewer panels would be needed, meaning less space used for large-scale operations.

The global community must also look at what goes into the production of the panels. This process often includes several toxic chemicals, which could pose health and safety risks and have negative environmental impacts. These chemicals include sulphuric acid, hydrochloric acid, nitric acid, hydrogen fluoride, methyl chloroform, and acetone.

Those involved in the development and production of solar infrastructure need to invest in improvements to the environmental impact of solar power to benefit humanity in the long run.

Solar Panel Lifespan and Beyond

Even with all the advancements going into the production of solar panels, they must stay green at the end of their life cycles. If they are to be of genuine benefit to us environmentally, they cannot just be thrown in a landfill. Thankfully, solar panels are recyclable.

Solar panels are pretty sturdy, typically lasting 30-40 years. They have no moving parts and are generally easy to fix. So how does the solar recycling process work?

There are two main types of solar panels, and they require different recycling methods. Silicon-based solar panels, which make up the majority of panels used, are disassembled, with up to 95% of the metal and 95% of the glass parts being reused.

The remaining parts are heat-treated and used to make new silicon. On the other hand, thin-film panels are shredded and separated into solids and liquids. The results are roughly 95% of the semiconductor material and 90% of the glass being reused.

The recycling process is a very efficient, well-organized process that has significant benefits for the environment and the economy. It is estimated that, by 2050, solar panels will have a recoverable value of £11 billion, with more than 2 billion new panels made from recycled material.

The Future of Solar Is Bright

With the need for renewable energy sources on the rise, solar is one of the most easily accessible options. The solar panel recycling process will ultimately help finance the solar industry’s future growth, creating employment opportunities and making the sector even greener.

by Shannon Flynn

Green Business Groups Lead Call for National Rollout of Clean Heat and Energy Efficiency Upgrades

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The UK government has pledged to set out new energy supply measures in response to the energy price crisis and Russia’s war in Ukraine. As energy prices have surged the government has come under increasing pressure to draw up an updated energy supply strategy. This strategy has also been called an ‘energy security strategy’ and ‘emergency energy strategy’.

Analysis from E3G, the independent climate change think tank, has shown that energy efficiency and clean heat are the quickest way to reduce dependence on expensive fossil gas, eliminate Russian imports and therefore bolster the UK’s energy security. It said that a rollout of energy efficiency, clean heat and renewable technologies would not only have the net effect of reducing customer bills but would substantially shrink gas consumption between now and 2025.The research has revealed that if the UK was to embark on a rapid rollout of domestic energy efficiency upgrades, clean heat installations and clean power technologies it could match the amount of gas imported from the UK from Russia four times over. It said that this could be achieved in less time than it takes to construct a new oil or gas field.

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Green business groups are calling for the government to strengthen their policy on the net zero transition and make efficiency measures and clean tech central to their response to the energy crisis.

The government has been swamped with letters from leading figures across the green economy and civil society hoping to persuade ministers to significantly increase their efforts to insulate homes and deploy clean energy technologies in response to soaring energy prices.

Letters have been received from the Association for Renewable Energy and Clean Technology (REA), the UK Green Building Council (UKGBC), the Net Zero Support Group of MPs, a coalition of more than 50 bishops as well as a major alliance of civil society groups. The business backed Electrify Heat campaign is calling for the government to put an ambitious, long-term electrification programme at the heart of its upcoming energy security strategy

The most recent letter from the REA and the Electrical Contractors’ Association (ECA) is backed by 25 companies including such companies as Octopus Energy, Ecotricity, Good Energy, British Electrotechnical and Allied Manufacturers’ Association (BEAMA) and the Energy Saving Trust.

The letter calls for an immediate relief package for households facing an unprecedented almost 50% increase in their energy bills, outlining several measures to mitigate the effect of the energy bill hike. At the same time the coalition is appealing to the government for the provision of new ‘catalysts’ that improve the insulation of homes and rapidly increase the installation of domestic renewables and clean technology. The coalition would like to see more support for the installation of millions of low carbon heating devices.

Dr, Nina Skorupska, CEO at the REA, said:

“The government must take action before it’s too late. That is why in parallel with increasing support for households being pushed towards the poverty line, the government must urgently reduce the UK’s dependency on gas and other fossil fuels. That means boosting home insulation, replacing gas boilers with green alternatives, and ramping up the installation of renewables and clean tech. This would support the transition to Net Zero, deliver new jobs and investment and protect consumers from volatile energy prices.”

The UK Prime Minister, Boris Johnson is believed to be in the process of drawing up plans to increase domestic renewable energy generation alongside domestic fossil fuels. The Department for Business, Energy and Industrial Strategy’s secretary Kwasi Kwarteng has stated that increasing domestic wind and solar generation is now “a matter of national security”.

In a recent newspaper article Boris Johnson declared that “renewable power is a crucial part of the solution” and set out the government’s intention to double down on new wind power and greatly accelerate the rollout of new offshore farms. He said that more would be done to exploit the potential of solar power, pointing out that it is now remarkably cheap and effective. He also said that the government would work to modernise the National Grid and our distribution networks.

However, although the government promised to spend £9.2bn on energy efficiency during this parliament it is yet to launch and deliver successful schemes backed with this level of funding. The Green Homes Grant closed last year having badly underperformed and the government has not yet announced a home energy efficiency scheme that equals its promise to replace it.  Though £2bn was pledged for the Green Homes Grant, a total of just £950m has been promised by 2025 under the Boiler Upgrade Scheme (BUS). The Climate Change Committee (CCC) are also asking for more clarity on, and support for making public and private sector buildings more energy-efficient above and beyond what was announced last October in the Heat and Buildings Strategy.

UKGBC’s CEO, Julie Hirigoyen said:

“Making domestic energy efficiency a priority is not only the responsible thing to do for public finances, but it will help towards the government’s energy independence and levelling up agendas, not to mention accelerating our journey towards a net zero carbon economy. The government must invest now in long term solutions to stop vast amounts of energy being wasted by heat leaking from the UK’s homes.”

Can Solar Panels Be a Ray of Hope for Your Business?

business solar panels

Small and medium sized businesses across the UK are starting to feel the pressure created by soaring energy prices. This situation is likely to get much worse as businesses face further costs as their existing fixed tariff contracts end. Times are particularly tough for businesses that have already had to deal with the economic uncertainty caused by Brexit and the Covid-19 pandemic. SMEs are most at risk as many of them will be left with little other choice than to pass costs on to their customers, further increasing inflationary pressure.

A recent survey from Tyl by Natwest has revealed that 30% of UK SMEs spend between £3000 and £3,999 on annual energy bills while almost a quarter spend over £4,000 annually. Spending this much on annual energy bills can have a significant impact on a small business and their overall costs. 65% of SMEs are spending up to one-fifth (0.20%) of their total business costs on energy consumption while 8% of SMEs are spending a massive 35-50% of their total business costs.

With energy prices set to rise again from April, it is not surprising that business owners are looking skywards to try and ease the pressure on their budgets by installing solar panels.

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If you are a business looking to save money on your energy bills installing a commercial solar panel system is likely to be a perfect solution for you.

Most businesses are active in the daytime making them ideal candidates for utilising solar panels. If you are not going to use all the solar energy your panels produce during the day, you will need to pair your solar array with a solar battery storage system.

Even small businesses can make substantial cost savings. Thousands of pounds can be saved over the 25-year lifetime of your solar panel system.

Just to clarify, commercial solar refers to systems installed in larger operations in sectors like agriculture and manufacturing whereas business solar refers to systems installed in small to medium sized businesses (SMEs) based in office premises.

Because an SME is more likely to have only limited space for a solar panel system the return on investment (ROI) will probably be closer to that of domestic installations.

If you are operating industrial solar panels, you may be able to sell your excess energy to utility companies for a profit.

However, whether your business is large or small, the benefits of solar panels go far beyond practicality and saving money. If you decide to opt for solar panels, you will also be reducing your company’s carbon footprint significantly.

Your carbon footprint will be determined by the amount of greenhouse gases produced by your actions. Solar energy is renewable and carbon neutral and so installing a solar array would indicate your company’s commitment to green and sustainable practices to the wider world.

How Much Do Commercial Solar Panels Cost

Advancements in technology have led to the cost of solar panels falling substantially in the last decade. Before investing in a solar panel system, you need to take into consideration several factors though, such as the size of your roof, the amount of energy they can produce and the number you will need.

If you are a small to medium sized business commercial solar panels will cost you between £16,000-£70,000, on average. To work out if solar panels are the right option for your business, you need to look at your utility bill to see how much energy your company uses each month and how much your utility company charges you per kW.

Most small to medium sized businesses use 30,000-50,000 kWh of electricity each year. You also need to bear in mind the location of your business in the UK which will affect the size of the system you need and subsequently the cost. For larger systems, a good rule of thumb is to calculate approximately £1,000 per kW plus VAT.

You may be eligible for tax reliefs if you install a commercial solar panel system though this is not possible for businesses such as solar farms that rely on solar energy for their revenue generation.

On 31 March 2021, The Chancellor of the Exchequer, Rishi Sunak, introduced the 50% First Year Allowance (FYA). To claim this tax break, businesses must invest in qualifying plant and machinery by 31 March 2023. Solar Panels are qualifying assets under the 50% First Year Allowance.

This means that by investing in solar, you will only pay corporation tax on your operating profits minus 50% of the value of your solar investment.

Here is an approximate breakdown of the cost of commercial solar panels excluding VAT.

System SizeAverage Cost
10 kW£9,500 + VAT
20 kW£18,200 + VAT
40 kW£35,000 + VAT
50 kW£44,000 + VAT
60 kW£51,000 + VAT

Due to the energy price cap rise of 54% and the huge increase in energy bills there has never been a better time to invest in solar. Rising electricity costs combined with falling panel prices mean the units could pay for themselves far quicker than expected.

As far as installation costs are concerned, a good way of estimating how much you will pay is to calculate £0.2p per watt fitted. This means that it can cost approximately £2,000 (excl. VAT) to install a 10kW system. Obviously, if you are installing a very large commercial system, you may need multiple workers to carry out the installation and the more people required, the higher the costs.

The maintenance costs for solar panels are very low. To ensure maximum efficiency, solar panels need regular light cleaning to remove dust and debris, but you only need to have a professional examine them every 4-6 years.

Do You Need Planning Permissions?

You may need to obtain planning permission before installing commercial solar panels in some situations. For example, if your building or property site is designated as historical or part of a world heritage site you will need to acquire permission.

Grants for Solar Panels on Commercial Buildings

The UK government does not offer any grants for solar panels on commercial buildings currently. The Feed-in tariff scheme closed in March of 2019. However, businesses can potentially experience financial gain from exporting excess energy back to the national grid under the Smart Export Guarantee (SEG) which took effect in January 2020. You must have a smart meter to measure the power exported to be eligible. Though the rates set by suppliers tend to vary they generally mimic wholesale and market prices. You could make a sizeable profit from the excess energy exported from your solar panels.

You may be able to find a company that is prepared to pay for the installation of your solar panel system in return for a percentage of the savings you make. This way your business will benefit from a subsidised rate per unit of electricity you use once the solar panel system has been installed.

There will of course be a few conditions which your company will have to meet including:

1. If pitched your roof should preferably be facing south, be flat or have a shallow pitch.

2. You must be legally able to rent your roof surface

3. You will need to Provide 12 months of electricity bills

4. Your roof must be structurally sound and not be made of asbestos

5. Your company must be established and stable – a credit score will be calculated

6. Finally, your building must be connected to a district network operator (the national grid).

If you are a business owner finding that your energy costs are spiralling out of control, it is definitely worth investigating whether solar panels could help to reduce your bills. A commercial solar system can reduce your utility costs, make your day-to-day operations more efficient and provide tax relief and additional income potential at the same time as reducing the size of your carbon footprint.

Why green energy is the investment you should be making

Green Energy

After UK regulator for energy Ofgem revised its energy price cap, a dramatic rise by 54% imposable on the average British household, many homeowners will feel anxious about energy spending this Springtime. Alternatives in energy sources will now, for many in the UK, feel even more attractive, not only to live sustainably, but also to reduce average energy costs.

Living costs in the UK are compounding at the fastest rate – the quickest for 30 years – and this is largely dependent on, and will continue to be influenced by, the increasing rates against energy and other commodities on the UK market. On behalf of the National Institute for Economic and Social Research, one think-tank even forecasted that the inflation rate could rise to as high as 10% by Q3 2022.

Achieving sustainability through everyday living, especially for households, now feels even more urgent, as dependency on the National Grid could price out an entire lifestyle. Shrinking the carbon footprint, both as a country and individually, has for years now been a priority to those who understand fully the economic, environmental and social advantages of sustainability. Having the proper green “credentials” can even help a business build favourable reputation within younger generations of buyers, the future customer base for many product and service providers.

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But the pathway to clean living has long been contested, as energy alternatives have begun to unlock rewarding futures for households who have been early to adopt. Everything from solar panels to window replacements have the power to create sustainable change – not only minimising carbon emissions in the average UK household, but keeping costs down.

Solar Panels

House trends have largely evolved in time, but the significance of sustainability has become so prioritised that it informs everything from design choices and architecture to energy usage. The recent popularity in “tiny” homes reflects how compactness can be used to minimise wasteful living habits; prefab buildings and “cargotecture”, on the other, are emerging trends that looks at inexpensive alternatives for how a house or building can be constructed. What these trends capture is a growing aspiration to use housing – whether construction, design or other – as an arena to innovative sustainable living.

Energising buildings via solar panel technology is, on the other, outliving its days as a trend. Estimations suggest that only 970,000 UK homes utilise solar technology installations to farm energy naturally. But solar and wind is predicted to source 50% of the UK’s energy by 2050, suggesting that solar technology has emerged as a market solution that could save households on their monthly bills and improve sustainability goals.

Material Decisions

Complementing solar technologies, more households are increasingly making greener material decisions. This means, simply, that non-toxic, recycled, and possibly reclaimed construction materials are ever present in homes.

Recyclable, renewable materials and other material technologies like composites are cost-saving ideas because they are part of what’s called a “circular economy”. In a model of circularity, everyday materials are reused time and again, minimising waste and costs that are involved in energy-intensive production lines. 

Smart Homes

As homes become “smarter”, households can creatively harness green technology to monitor their every living costs, focus-in on unsustainable practices, and even improve energy efficiencies. The concept of a smart homes is the most common description for technologies that are seamlessly integrated into households, sometimes out of convenience, but most often to improve the performance of energy.

Common scenarios include household products that can control lighting, temperature or climate. These technologies are easily adopted because they enhance lifestyles in the process, such as the comfort of having temperatures controllable via a smart phone or even voice command. But what most households should look to take inspiration from is the power that these tools have in unlocking a home with better energy performance.

Window Replacements

Energy efficient windows can be the difference between an extra layer of thermal protection or energy waste. As windows are installed at points across a home, keeping heating demands efficient will require home design decisions that minimise common areas of energy waste. Many may not be aware that heat loss can be as high as 25% -30% from windows alone, one of the biggest areas of waste.

Window replacements, on the other hand, can ensure that the likes of thermally broken frames trap energy, rather than letting it go to waste. Metal windows, for example, can offer properties a stylish, contemporary look without compromising on the high level of insulation or energy efficiency.

A combination of these strategies – harnessing solar energy from technology, getting smarter with your property and replacing windows – can reduce energy waste. The end goal is to reach a point of sustainability that’s both economic and convenient for the everyday household.

by Isobel Owen

www.mrs.digital