Zero percent VAT rate for solar panel installations
By Morgan Pierce
Updated April 20, 2023
What does the slashed VAT rate mean for consumers?
If, like so many of us, you’re struggling with high energy bills and feeling miserable about the snail’s pace of progress in addressing the climate change emergency, take heart. The government announced that as of May 1, there is a zero percent VAT rate for solar panel supply and installation in Ireland. Consumers and environmentalists are shocked as the government does two things right at once.
According to figures from the Department of the Environment, it will bring down the average cost of installing solar panels by €1000. On a typical system, that means a decrease in price from €9,000 to €8,000.
The “permanent” abolition of VAT was done in order to help families and businesses deal with “high energy prices and cost of living challenges”. At current electricity price levels, it means customers installing solar now will earn back their investment in 6 years rather than 7.
Coupled to recent decisions to remove the requirement for planning permission for the installation of solar on private homes, the zero percent VAT rate for solar panels is a significant step toward making them affordable for all.
How can solar cost you even less?
Minister for the Environment Eamon Ryan took the opportunity of the VAT announcement to draw attention to a third government initiative that is beginning to take hold – the Micro-generation Support Scheme (MSS).
The Scheme, written into Ireland’s Climate Action Plan, allows individual households to sell excess renewable energy back to the grid. The initiative, described by the Minister as “very successful”, created a structure under which excess energy generated by things like solar panels could be sold to the consumer’s energy supplier at a fair price.
“With thousands of householders […] signing up,” Ryan said , “there is now an even greater opportunity for citizens to be part of the energy transition and become active energy consumers, whilst also supporting the electricity grid and strengthening Ireland’s energy security.”
The Government plans to generate 2.5GW of the country’s energy from solar by 2030. The MSS aims to deliver 380MW of that total. Depending on panel size, this equates to over 1 million solar panels on approximately 70,000 buildings. If it’s successful, that’s good news for both consumers and the environment.
The government’s Clean Export Guarantee (CEG) stipulates that households will receive a competitive market rate when they sell their excess electricity back to the national grid.
To be eligible for payments, consumers must first register their system with ESB networks. There’s a form (of course) and it is something your solar energy installer can and should help you with.
Once you have notified ESB, you’ll need to discuss how to apply for the MSS with your own energy provider, and their competitors. Make sure to ask them what rate they will be paying for any electricity you supply.
Investing in solar PV systems can bring many benefits, including reduced energy bills, increased energy independence, and a reduced carbon footprint. If you are interested in installing a solar PV system, it is worth exploring the different grant options available and seeking professional advice from one of our solar energy advisors.
Feel free to contact us for more information, we’re here to help.