Blog · Published 2026-05-12

How to apply for the IETF in 2026: you cannot — the fund closed in July 2025. Here is what replaces it

The Industrial Energy Transformation Fund was the UK's largest single grant programme for industrial decarbonisation — and the toughest. It is closed. After the 2025 Spending Review the government decided there would be no further extension of the IETF and that no successor fund is planned; the planned second competition window of Phase 3 was cancelled, so the Spring 2024 window (29 January to 19 April 2024) turned out to be the last (gov.uk collection page, updated 25 June 2026). This guide, first written in May 2026 when a further round was still being talked about, is kept as a record of how the scheme worked and rewritten around what a manufacturer can actually do with a solar project now.

What closed, and when

- Phase 1 (2020-21) and Phase 2 (2021-22) funded energy-efficiency and deep-decarbonisation projects; awarded projects deliver to 2028. - Phase 3 launched on 22 January 2024 with up to £185m and opened to applications on 29 January 2024; the Spring 2024 competition closed on 19 April 2024. - 3 July 2025: DESNZ announced that, following the Spending Review, there would be no further extension of the IETF and that Phase 3's planned second competition window would not take place. - No Phase 4. No successor fund is planned. The 2024 Autumn Budget committed £163m only to complete the projects already awarded.

Anyone still quoting a 'Phase 4 expected Q2 2026', a '~£100m round' or a 'next window' is working from guidance that was never published.

How the scheme worked (for the record)

The IETF was competitive and paperwork-heavy. It suited:

- Energy-intensive manufacturing sites in England, Wales or Northern Ireland (Scotland ran the separate SIETF) - Annual energy spend above £200k and consumption above 1 GWh - A credible decarbonisation project with measurable energy or carbon savings against a 12-month baseline - 50-70% match funding from non-government sources - £40k-£80k of professional fees for the baseline, design and application

The process ran Expression of Interest (2-3 pages, a 6-12 week window) → full application (50-80 pages to the HM Treasury Five Case Model) → independent technical assessment (3-9 months) → Grant Funding Agreement with milestones, paid in arrears against verified spend and savings, then five years of energy-data reporting. Standalone solar PV rarely won; awards went to integrated packages that paired PV with process electrification, waste-heat recovery or compressed-air efficiency.

What a manufacturer uses instead in 2026

1. Capital allowances — the biggest lever left. Solar PV is special-rate plant, so full expensing does not apply to the panels; the Annual Investment Allowance gives 100% relief on the first £1m of qualifying spend in the year and the 50% first-year allowance covers the balance. At the 25% main rate that is 25p back per £1 of solar capex in year one — more than most regional grants. Main-rate plant bought alongside it (batteries, VSD compressors, heat-recovery plant, LED-UV curing) does qualify for full expensing.

2. Freeport tax sites. A site inside a Freeport tax site can claim enhanced capital allowances on plant and machinery.

3. Regional growth-hub grants. Match-funded capital grants of £1k-£100k depending on the programme (BEAS in the West Midlands, the Tees Valley Resource Efficiency Fund, Y&NY, WECA and equivalents) — the only live grant money for most SMEs, and it moves in rounds, so check the current call.

4. Export income. Smart Export Guarantee on the export and REGO accreditation above 50 kWp.

5. Finance that needs no grant. A Power Purchase Agreement puts the capex on an investor; asset finance keeps the tax relief with you. See the finance hub.

6. Keep the baseline. An ISO 50001-compatible energy baseline still pays for itself through ESOS, Climate Change Agreement targets and customers' Scope 3 reporting.

If you already hold an IETF award

Existing Grant Funding Agreements are unaffected by the closure: milestones, claims in arrears and the five-year monitoring period all still apply, and awards were clawed back for missed milestones in earlier phases. Scope changes still need DESNZ approval. Treat the programme dates as hard.

FAQs

FAQs on this topic

Is the IETF open to applications in 2026?

No. The last window closed on 19 April 2024 and DESNZ confirmed in July 2025 that there will be no further extension and no successor fund.

Will there be an IETF Phase 4?

No. The claim that Phase 4 would open in Q2 2026 with around £100m was never published by DESNZ; the collection page on gov.uk (updated 25 June 2026) says no successor fund is planned.

What replaces the IETF for solar on an industrial roof?

Tax relief (the AIA plus the 50% first-year allowance on the panels; full expensing on main-rate plant), Freeport enhanced capital allowances where they apply, regional growth-hub grants where a round is open, SEG and REGO income, or a PPA that needs no capital.

Is Scotland's SIETF still open?

All three SIETF calls are marked closed on gov.scot and no reopening date has been published (checked September 2026).