IETF solar grant: the fund closed in July 2025 — what manufacturers can use instead

What the IETF was

The IETF helped industrial sites with high energy use cut their bills and emissions. It funded two kinds of work: energy-efficiency upgrades, and deep decarbonisation of industrial processes such as fuel switching and electrifying process heat. It also funded the feasibility and engineering studies behind those projects. Awards were competitive and made in time-limited windows, each with its own guidance and cost-effectiveness tests.

Solar PV sat at the edge of that brief. It was typically fundable only as part of a wider process project — for example, supplying renewable electricity to a newly installed industrial heat pump or electrode boiler. It was never a general solar grant for manufacturers.

What "closed with no successor" means for a factory solar project

• Do not hold a project waiting for a Phase 4 or a "next round" — none is planned.
• Scotland's Scottish Industrial Energy Transformation Fund (SIETF) has all three of its calls marked closed.
• If an installer or consultant tells you IETF money is available for solar, ask for the competition document and the window dates.
• Build the business case on self-consumption and tax relief. A factory running daytime shifts typically self-consumes most of what a well-sized array generates, and that — not a grant — is what drives a 3–6 year payback.

What reduces the cost of factory solar in 2026

Annual Investment Allowance

The AIA lets a business deduct 100% of qualifying plant and machinery spend from taxable profits in the year it is incurred, up to £1m a year. At a 25% corporation tax rate, a £200,000 system returns £50,000 in year-one tax relief. See the AIA guide for solar.

50% special-rate first-year allowance

Solar PV is special-rate expenditure, so it does not qualify for full expensing. Spend above the AIA cap takes the 50% first-year allowance, with the balance written down in the special-rate pool.

Freeport and Investment Zone enhanced capital allowances

Businesses inside a designated Freeport or Investment Zone tax site may claim enhanced capital allowances on qualifying plant. This is a live relief, separate from the Energy Technology List allowances that ended in April 2020.

Power Purchase Agreement

Under a PPA a provider funds, owns and maintains the system and sells the electricity to the site at a fixed rate below grid for 15–25 years. There is no capital outlay. See how a commercial solar PPA works.

Worked arithmetic: a mid-size manufacturer without a grant (modelled)

Illustrative, modelled scenario — not a real project. A food manufacturer installs 500kWp at £800 per kWp, a capital cost of £400,000. At about 950 kWh per kWp the array generates roughly 475,000 kWh a year. With 85% self-consumed against a 28p/kWh import price, the saving is about £113,000 a year. The AIA at 25% corporation tax returns £100,000 in year one, leaving a net cost of £300,000 and a payback of about 2.7 years — 3.5 years before tax relief. Self-consumption and the import price move this answer far more than any grant ever did.

Frequently asked questions

Is the IETF still open for solar projects?

No. The Industrial Energy Transformation Fund closed in July 2025. After the Spending Review the government decided there would be no further extension and that no successor fund is planned, and the planned second competition window of Phase 3 was cancelled. The last window, in spring 2024, closed on 19 April 2024.

Is there an IETF Phase 4?

No. The IETF closed in July 2025 and no Phase 4 or successor fund has been announced. Pages that describe a Phase 4 window, a 2026 opening date or a new budget are out of date.

Did the IETF ever fund solar on its own?

Rarely. The IETF was aimed at industrial energy efficiency and deep decarbonisation of processes. Solar PV was typically fundable only as part of a wider project, for example supplying electricity to a newly electrified process-heat load. It was never a general solar grant for manufacturers, and it closed in July 2025.

What about Scotland's SIETF?

Scotland ran its own Scottish Industrial Energy Transformation Fund. All three of its calls are marked closed on gov.scot, with no reopening date published.

What reduces the cost of factory solar now?

The Annual Investment Allowance: 100% of qualifying spend deducted from taxable profits in year one, up to £1m a year. Solar is special-rate expenditure, so spend above the cap takes the 50% first-year allowance rather than full expensing. Sites inside a Freeport or Investment Zone tax site may claim enhanced capital allowances. A Power Purchase Agreement removes the capital cost altogether.

Related guides

• Commercial solar grants and funding routes
• Solar panels for factories
• Annual Investment Allowance for solar
• PSDS status for public bodies