Installing solar panels is one of the best investments a homeowner can make in 2026, and there are several government incentives and funding schemes that make it even more affordable. Whether you qualify for a full grant through the Warm Homes: Local Grant, benefit from 0% VAT on your installation, or earn money through the Smart Export Guarantee, this guide explains every financial incentive available to Bristol and Somerset homeowners in 2026.
0% VAT on Solar Panels and Battery Storage
The most widely available financial benefit for solar installations in 2026 is the 0% VAT rate. Since April 2022, solar panels, battery storage, and other energy-saving materials have been zero-rated for VAT. This incentive is confirmed until at least March 2027, and it applies to every homeowner in the UK, regardless of income, property type, or location.
The 0% VAT is not a grant and does not require any application. It is applied automatically by your installer at the point of purchase. On a typical 4.5kWp solar system costing approximately £7,613, the 0% VAT saves you around £1,200-£1,500 compared to the standard 20% rate. On larger systems, the saving is even more substantial.
The government has not confirmed whether this zero rate will continue beyond March 2027. If it reverts to the standard 20% rate, solar installations will become significantly more expensive overnight. This makes 2026 an optimal window to invest while the full VAT saving is available. For more details on our pricing, visit our solar panel costs page.
Warm Homes: Local Grant (Replaced ECO4)
The ECO4 scheme closed in March 2026. Its replacement — the Warm Homes: Local Grant — is now the primary funded solar scheme for eligible households. Delivered through local authorities including Bristol City Council and Somerset Council, it offers up to £15,000 for qualifying energy improvements including solar panels, battery storage, heat pumps, and insulation.
To qualify for the Warm Homes: Local Grant, you typically need to meet the following criteria:
- Household income below approximately £36,000 per year (or be in receipt of qualifying means-tested benefits)
- Live in a property with an EPC rating of D, E, F, or G
- Be the homeowner or have permission from your landlord
If you qualify, the grant can cover the full cost of a solar panel installation plus additional measures. D&R Energy checks your eligibility free of charge and handles the entire application process. Visit our grants page for full details and eligibility criteria.
Smart Export Guarantee (SEG)
The Smart Export Guarantee (SEG) is a scheme that requires energy suppliers to pay you for surplus electricity that your solar panels export to the national grid. If your solar panels generate more electricity than you use during the day and your battery is fully charged, the excess is automatically exported to the grid, and your energy supplier pays you for every kilowatt-hour exported.
SEG tariff rates vary between energy suppliers and are updated regularly. In 2026, typical export rates range from 3p to 15p per kWh, depending on the supplier and tariff type. Some suppliers offer fixed rates, while others offer variable or time-of-use rates that pay more during peak demand periods. Over a year, a typical 4.5kWp system in Bristol could earn £100-£300 through SEG payments, depending on your consumption patterns and the tariff you choose.
To receive SEG payments, your solar installation must be MCS-certified, which is standard with all D&R Energy installations. You can learn more about how the SEG works and how to maximise your export income on our Smart Export Guarantee page.
Local Council Schemes in Bristol and Somerset
In addition to national schemes, there are several local initiatives in the Bristol and Somerset area that support homeowners investing in renewable energy:
- Bristol City Leap: Bristol City Council's partnership programme aimed at making Bristol carbon neutral. While not a direct grant for individual homeowners, the programme supports community energy projects and provides resources for residents exploring solar energy.
- Somerset Council Energy Advice: Somerset Council offers free energy advice services and can help identify funding opportunities for home energy improvements, including solar panels and insulation.
- Home Upgrade Grant (HUG2): Targeted at homes that are not connected to the gas grid with an EPC rating of D, E, F, or G. HUG2 can provide significant funding towards solar panels, insulation, and other energy efficiency measures for eligible properties.
- Local Authority Delivery (LAD) Scheme: Some local authorities in the South West continue to deliver energy efficiency improvements through the LAD scheme, which can include solar PV and battery storage for eligible households.
Solar Finance Options
If you do not qualify for grants but want to spread the cost of your solar installation, finance options are available. Many homeowners choose to finance their solar system over 5-10 years, making manageable monthly payments while benefiting from energy savings from day one. In many cases, the monthly savings on your electricity bill can exceed your finance payment, making the system effectively cash-flow positive from the start.
D&R Energy can provide information about finance options during your free consultation. We are committed to helping every homeowner find a pathway to solar that works for their budget, whether that is a cash purchase, finance, or a grant-funded installation.
How to Get Started
The best first step is to get a free, no-obligation quote from D&R Energy. During the process, we will assess your property, discuss your energy usage and goals, check your eligibility for any grants or funding schemes, and provide a transparent quote that includes 0% VAT. Whether you qualify for the Warm Homes: Local Grant, want to take advantage of the 0% VAT window, or simply want to start saving on your energy bills, we are here to help. Visit our solar grants page or contact us to get started.
