The UK has allocated an additional £100 million to support solar and battery installations for social housing in its Budget 2026 
The government has cut the Warm Homes Plan by £1 billion but established a £2 billion Energy Wealth Fund for renewable and low-carbon infrastructure 
Residential solar and battery installations will face 5% VAT from April 1, 2027, raising concerns over higher upfront costs 
The UK’s solar energy industry has mixed feelings about the country’s Budget 2026, with Solar Energy UK calling it ‘broadly positive’ for solar and battery technology, even as the government has announced a £1 billion cut to the Warm Homes Plan. 
A major highlight of the budget is the announcement of an additional £100 million for the Social Housing Fund to support solar and battery installations for households. The government plans to support up to 57,000 solar installations in the current financial year. 
The government has also announced the establishment of an Energy Wealth Fund (EWF) within the National Wealth Fund (NWF) to invest in renewable energy and low-carbon energy infrastructure across the UK. The EWF will receive £2 billion, funded by future revenues from North Sea oil and gas. 
Launched earlier this year as the biggest public investment in home upgrades in the UK’s history, the Warm Homes Plan was announced with a £15 billion budget. It aims to upgrade up to 5 million homes with solar panels, batteries, heat pumps and insulation by offering low- and zero-interest loans (see UK’s £15 Billion Warm Homes Plan To Boost Solar & Battery Uptake).  
However, in the budget announcement, the government has announced a £1 billion cut to the Warm Homes plan as it prioritizes defense funding. Yet it has introduced the Warm Homes Loan Scheme to support uptake of heat pumps and clean technology, including solar panels and battery installations. According to the government, solar panel installations totaled almost 150,000 in H1 2026, while heat pump sales reached a record high in 2025, both indicating a rapid uptake of these technologies. 
The government has also announced it will remove zero value-added tax (VAT) for energy-saving materials, and increase it to 5% from April 1, 2027. Solar Energy UK says this will raise the upfront cost of cutting bills just when it needs to come down. Currently, consumers are not required to pay VAT on home solar and battery installations. 
“Removing the VAT exemption is inconsistent with the Government’s intention for more people to enjoy the benefits of home solar and battery systems. With domestic electricity bills now zero-rated until July next year, saving energy will be taxed more heavily than consuming it – a perverse incentive,” said Solar Energy UK Chief Executive Chris Hewett. He added that the industry will urge the government to reverse course. 
Solar Energy UK said the budget proposes to prioritize projects ready to connect to the grid and generate power soon under the upcoming eighth round of the Contracts for Difference (CfD) scheme. This may create uncertainty for projects planned for later years.  
The government has also opened consultation on offering existing low-carbon generators a fixed-price Wholesale CfD scheme. These are currently supported by the legacy Renewable Obligation Certificates system. However, Solar Energy UK warned that the scheme’s final design could affect investor confidence. The consultation is open till December 9, 2026. 
Overall, the UK has made it clear that even as it transitions to clean power and net zero to support energy security, oil and gas will remain part of the electricity mix for decades to come. 
The complete Budget 2026 is available on the UK government’s website.  
Meanwhile, the government continues to clear large-scale solar PV and storage projects. It approved nearly 2 GW of new solar PV and battery energy storage system (BESS) capacity in the month of October 2026 alone. These include Elements Green’s 1.12 GW DC/800 MW AC Great North Road Solar and Biodiversity Park, with 440 MW/880 MWh of storage; Cubico Sustainable Investments’ Frodsham Solar Project in Cheshire, with over 50 MW of solar and an associated battery system; Island Green Power’s 500 MW Green Hill Solar Farm in Northamptonshire and Milton Keynes; and RES Group’s 450 MW Steeples Solar Farm in Nottinghamshire, paired with 150 MW of battery storage. 
TaiyangNews 2024

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