IETF Phase 3
IETF Phase 3 Solar Grant — Industrial Decarbonisation
Industrial Energy Transformation Fund Phase 3 supports UK manufacturers to electrify and decarbonise. Solar PV (alongside heat pumps, electric process heat) is grant-eligible at 30–60% of capital cost.
£500m
Phase 3 budget
30–60%
Grant intensity
Manufacturing
Sector focus
2026–2028
Phase 3 window
The Industrial Energy Transformation Fund (IETF) Phase 3 is the UK government's flagship industrial decarbonisation grant scheme. £500m of capital funding supports manufacturers to electrify process heat, install on-site renewables, and improve energy efficiency. Solar PV is grant-eligible at 30–60% of capital cost when integrated with broader decarbonisation projects.
What IETF Phase 3 Funds
- Industrial heat pumps (commercial / industrial scale)
- Electric process heat systems (electrode boilers, infrared heaters, induction)
- Heat recovery technology
- Solar PV when integrated with above (provides renewable electricity for the new electrified loads)
- Battery storage when integrated with solar + electrified loads
- Energy efficiency upgrades (insulation, BMS, motor efficiency)
- Compressed air system upgrades
- Waste heat recovery
Eligibility — Who Can Apply
- UK-based manufacturing or industrial businesses
- SIC codes in manufacturing (10–33)
- Sites with existing energy demand above defined thresholds
- Project must demonstrate decarbonisation impact (typically 25%+ reduction in site emissions)
- Project must demonstrate cost-effectiveness on £/tCO2 abated
Grant Intensity — How Much You Can Claim
- Small enterprises: up to 60% of eligible capital
- Medium enterprises: up to 50% of eligible capital
- Large enterprises: up to 30% of eligible capital
- Defined under EU State Aid framework (retained UK law)
- Maximum grant per project typically £14m
What a Typical IETF + Solar Project Looks Like
Example — UK food manufacturer, mid-size enterprise:
- Existing: gas-fired process heat (steam boiler), grid electricity for cooling and motors.
- Project: 800kW rooftop solar PV + 1.5MW heat pump replacing gas boiler + battery storage.
- Total capital: £2.4m
- IETF Phase 3 grant (50%): £1.2m
- Net business capital: £1.2m
- Annual saving: £450,000 (gas displacement + electricity bill reduction)
- Net payback (post-grant): 2.7 years
- CO2 reduction: ~1,200 tCO2/year
Application Process
- Pre-application engagement — discuss project with IETF technical team.
- Concept submission — short proposal, technical specification, cost-effectiveness modelling.
- Stage 1 application — full project proposal, including SAP / energy model, cost breakdown, decarbonisation metrics.
- Stage 2 application — final commercial terms, financial due diligence, consortium agreement.
- Award and grant agreement — typically 4–6 months from concept submission.
- Project delivery — typically 12–24 months after award.
- Post-installation reporting — verified energy and emissions data submitted to track grant outcomes.
How We Support IETF Applications
- Technical project design including solar + heat pump integration
- Energy modelling and decarbonisation impact calculation
- Cost-effectiveness analysis (£/tCO2 abated)
- Stage 1 + Stage 2 application support
- Project delivery to IETF specifications
- Post-installation monitoring and verification
Frequently Asked Questions
Can solar alone qualify for IETF Phase 3?
Solar PV alone is generally not IETF-funded — IETF targets industrial decarbonisation projects. Solar qualifies when integrated with electrification of process heat (heat pumps, electrode boilers) where it provides renewable electricity for the new loads.
How much is IETF Phase 3?
Phase 3 budget is approximately £500m of capital grant, awarded over 2026–2028 in competitive funding rounds.
What grant intensity does IETF Phase 3 offer?
Up to 60% for small enterprises, 50% for medium, 30% for large. Maximum grant per project typically £14m.
Who is eligible for IETF Phase 3?
UK-based manufacturing or industrial businesses (SIC 10–33). Project must demonstrate meaningful decarbonisation impact (typically 25%+ site emissions reduction) and cost-effectiveness.
How long does the IETF application process take?
Concept-to-award typically 4–6 months. Project delivery typically 12–24 months after award. Post-installation verification continues for 2–3 years.
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Maximising Your IETF Solar Grant: Application Strategy and Eligible Costs
The Industrial Energy Transformation Fund (IETF) is available to UK manufacturing and industrial businesses with significant energy consumption. Solar PV is explicitly listed as an eligible technology under the deep decarbonisation pathway, particularly when combined with demand reduction measures and energy management systems. Phase 3 of the IETF is currently open; the typical grant rate for solar projects is 30-35% of eligible installed cost (up to £500,000 per project for Phase 3 energy efficiency grants; up to £10M for deep decarbonisation capital grants).
Eligible costs include: solar panel supply and installation, mounting systems, inverters, energy management system (EMS), battery storage where integrated with the solar project, and project management fees directly related to the eligible capital investment. Ineligible costs include: preliminary surveys, feasibility studies, legal fees and costs already incurred before grant offer. The IETF uses a competitive application process — applications are assessed against energy saving per pound of grant, carbon reduction potential and strategic alignment with the IETF programme objectives.
How does IETF interact with Annual Investment Allowance for solar?
IETF grants and Annual Investment Allowance (AIA) can both apply to a solar project, but you can only claim AIA on the net cost after grant — if your solar system costs £500,000 and you receive a £175,000 IETF grant, your AIA claim is on £325,000 (the net capital expenditure). For profitable businesses in the 25% corporation tax bracket, the AIA on £325,000 is worth £81,250 in tax relief. Combined with the IETF grant, the effective net cost of the £500,000 installation is only £243,750 — less than half the headline cost. Always confirm tax treatment with your accountant.
Who manages the IETF application process?
IETF applications are submitted through the DESNZ (Department for Energy Security and Net Zero) portal. We prepare the full technical documentation required for an IETF application alongside our solar system design: energy baseline data, projected energy savings, carbon reduction calculations, detailed project cost breakdown and installation programme. Our IETF application support is included in our project management fee for eligible industrial clients. Contact us to discuss whether your facility qualifies for IETF funding.
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Get a Free QuoteGet Started with IETF Solar
Our energy team has experience preparing IETF applications for manufacturing and industrial businesses across multiple sectors. We can assess your facility's eligibility, prepare the energy baseline documentation, design the solar project, and submit the complete application package. IETF applications are competitive — we help you present the strongest possible case by quantifying energy savings, CO2 reduction and strategic alignment with IETF programme objectives. Contact our IETF team today for a free eligibility assessment and to discuss the application timeline for your facility.
IETF Phase 3 applications are assessed on a competitive basis — early, well-prepared submissions have a significantly higher success rate than late or incomplete applications. Contact our energy team today to begin the IETF eligibility assessment and application preparation process for your facility.
Get in touch with our IETF application team today. Early engagement gives your application the best chance of success in this competitive funding programme.