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Energy grants, incentives and quality schemes

Jonathan Atkinson, co-founder of Carbon Co-op, a social enterprise that helps people and communities to radically decarbonise their energy use, gives the low-down on energy grants and incentive schemes which could save you money.

If you’ve decided to invest in energy efficiency, a heat pump, or solar thermal, there are a number of schemes available to help cushion the costs.

Green Homes Grant

The Green Homes Grants programme was launched in September 2020 in England with £1.5 billion. It was to fund two thirds of the cost of a suite of technologies and energy efficiency measures up to a limit of £5000, or the total cost up to £10,000 for those on a low income or certain benefits. Eligible technologies included solid wall insulation, loft top up, solar thermal and heat pumps. If one of these ‘primary measures’ was chosen, a number of secondary measures became available including new windows and ventilation systems. It didn't cover PV.

However, the programme only lasted six months and in March 2021 it was suddenly scrapped by the government following a critical assessment of the scheme. Instead, £300 million is being diverted into local authority schemes for people on low incomes instead. These are the Green Homes Grant Local Authority Delivery Scheme and Social Housing Decarbonisation Fund Demonstrator, which support upgrading homes.

The flagship scheme had been criticised even during its first few months, mainly due to the lack of appropriately trained contractors but also because of the administration of the scheme by an outsourced, private company which has led to delays in paying builders delivering the works.

The cancelling of the scheme leaves the UK with no convincing plan for tackling household heating emissions, without which we have no way to tackle climate change. The Green Homes Grant was also the centrepiece of Boris Johnson’s promise to “build back greener” from Covid-19, a green stimulus that was still paltry compared to that of many other countries e.g. Germany which has pledged around £36 billion for a green stimulus.

The Green Homes Grant didn't cover Scotland, Wales or Northern Ireland. For these locations see Home Energy Scotland,the Nest scheme in Wales, or NI Energy Advice for more information.

Renewable Heat Incentive

The Renewable Heat Incentive (RHI) covers England, Scotland and Wales. Eligible technologies include heat pumps and solar thermal panels, and also biomass boilers.

This scheme works differently – the homeowner covers the upfront installation costs and incentive payments are made for seven years, based on the amount of renewable heat made by your heating system.

You can get both the RHI and the Green Homes Grant for the same technology unless the grant covered the full cost of the installation, but the value of the Green Homes Grant will then be deducted from your RHI payments.

You’ll need to use an MCS registered installer (see below) and in many cases fit specialist heat metering. The tariffs are fairly complex, and can change depending on the size of your home and how much heat you use, so take a look at the government or Energy Savings Trust website to see what you could get.

Microgeneration certification scheme

The government-mandated Microgeneration Certification Scheme (MCS) is a quality standard
covering installers of certain low carbon technologies, in particular heat pumps and solar PV  panels. Whilst not an absolute guarantee of quality, MCS offers a mechanism for best practice, advice and rectification. Many incentive schemes like the renewable heat incentive (RHI) require MCS qualified installers so look out for the standard.

Reduced VAT rates

Before 2019, energy efficiency materials were subject to a 5% VAT rate. However, due to an EU ruling, the availability of the reduced VAT rate was limited. It is now available in one of two circumstances:

  • if you are over 60 years of age and/or on a selection of benefits or
  • if the value of the materials used in your project is 60% or less of the value of the whole job.

It’s also only applicable to certain improvements. It is a little confusing so we’d suggest talking to your chosen contractor if you think you’re eligible, as ultimately they will be claiming it.

Energy Company Obligation

The Energy Company Obligation or ECO scheme is an obligation placed on the largest energy suppliers to invest money in energy efficiency measures. Unfortunately, what was a generous scheme when it was first introduced was subsequently labelled as ‘green crap’ by David Cameron and reduced in scope and scale. Now it’s available to a small number of households with access to certain benefits, for a limited set of improvements.

The quality of works installed under the scheme has also come under severe criticism. If you are interested and you think you may be eligible contact your energy supplier for details.