Blog · Published 2026-05-12

IETF Phase 4 preparation: what UK manufacturers should do in 2026

Phase 4 of the Industrial Energy Transformation Fund is expected to open in Q2 2026 with around £100m available — the next major UK capital grant window for energy-intensive industry. This post sets out what eligible manufacturers should be doing now to maximise their chance of an award, based on the patterns from Phase 1-3 outcomes (~£280m awarded across 250 projects, with a roughly one-in-three EoI to award rate).

Phase 4 expected scope and timing

Based on DESNZ statements at the close of Phase 3 (mid-2024), Phase 4 is expected to:

- Open Q2 2026 (April-June) - Carry ~£100m total budget across the round - Continue the small projects (under £500k) and large projects (£500k-£14m) split - Maintain the energy efficiency and decarbonisation focus areas - Continue with England, Wales and Northern Ireland eligibility (Scotland separate)

The Phase 3 application window was 8 weeks for EoI, 12 weeks for full application, 3-9 months for technical review and award. Total end-to-end: 9-15 months from EoI submission to grant award.

DESNZ has signalled an increased focus on hydrogen-ready interventions and process electrification in Phase 4. Pure solar applications continue to be discouraged — IETF rewards integrated packages.

Pre-application work to do now (Q1-Q2 2026)

Phase 4-ready manufacturers should be progressing on these workstreams now:

1. Energy baseline. 12+ months of half-hourly consumption data, broken down by process. ISO 50001-compatible methodology. External auditor £15k-£40k typical.

2. Project shortlist. 2-3 candidate decarbonisation projects ranked by IRR and carbon saving. Strong Phase 4 candidates pair solar with process electrification, heat recovery or efficient compressed air.

3. Technical design. RIBA Stage 2-3 equivalent for the leading project. Detailed engineering specification, supplier quotes, single-line diagrams, building services drawings.

4. Match funding evidence. Bank facility offer letter, parent guarantee, asset finance pre-approval. Documentary evidence — not verbal commitment.

5. Subsidy control review. Cumulative UK government subsidies received in last 3 years. Beware approaching the de minimis ceiling.

6. Internal governance. Board approval for the project commitment. Named sponsor and delivery team.

Most successful applicants commit £40k-£80k of professional services fees during pre-application — energy auditor, engineering consultant, grant writer. Don't expect to recover all of this from the grant.

What wins in IETF

Looking at Phase 1-3 awards, the patterns are clear. Strong applications share these features:

- Clear sector eligibility. Climate Change Levy main-rate businesses. Food & drink, chemicals, paper, metals, ceramics, automotive. - Material carbon savings. Typically 200+ tCO2e/year. Smaller savings on standalone sites struggle against multi-site programmes. - Strong baseline. ISO 50001-compatible. Clear methodology. Conservative savings assumptions. - Integrated package. Solar PV + heat pump + insulation + process electrification — not solar alone. The best Phase 3 award winners combined 3-5 interventions. - Robust match funding. Documented commitment, not aspiration. - Strong project management capacity. Named sponsor, delivery team, governance structure. IETF cares about delivery as much as design. - Sector / industry strategic fit. Projects supporting UK strategic priorities (steel decarbonisation, food security, automotive transition) score additional points.

Weak applications fail on: poor baseline data quality, optimistic savings projections, weak match funding, standalone solar without integration, weak governance.

Geographic patterns from Phase 3

Phase 3 awards by region were broadly proportional to industrial activity:

- North-West: Largest share (~22% of awards) — chemicals, automotive, paper - Yorkshire and the Humber: ~18% — steel, food processing, glass - West Midlands: ~16% — automotive, advanced engineering - East Midlands: ~12% — food, automotive - South-West: ~9% — food, aerospace - South-East: ~7% — pharmaceuticals - East of England: ~6% — food, biotechnology - North-East: ~5% — chemicals, automotive - Wales: ~3% — steel, food - Northern Ireland: ~2% — food, manufacturing

No single geographic concentration — IETF is genuinely UK-wide (minus Scotland). Don't assume your geography excludes you.

Scottish manufacturers should pursue the parallel Scottish Industrial Energy Transformation Fund managed by Scottish Government / Scottish Enterprise.

Timeline back-cast from a Q2 2026 window opening

If the Phase 4 window opens 1 June 2026:

- By mid-March 2026 (now): Engage energy auditor and engineering consultant. Begin baseline data collection. - By end-April 2026: Baseline complete. Project shortlist ranked. - By mid-May 2026: Technical design at RIBA Stage 2-3. Match funding evidence in hand. - By 1 June 2026: EoI submitted within first week of window. - By August 2026: Full application submitted (assuming EoI approval). - By December 2026: Technical assessment complete; award decision. - By March 2027: Grant Funding Agreement signed; project mobilisation. - By September 2028: Project delivery complete; first claims paid.

If your business plans to apply but isn't this far along, the window will likely close before you can submit a competitive application. The next round (Phase 5?) is unconfirmed but unlikely before 2027-28.

FAQs

FAQs on this topic

Can my business apply for IETF Phase 4?

Subject to: eligible sector (CCL main rates), England/Wales/NI location (Scotland has parallel scheme), SME or larger, demonstrable energy/carbon savings, 50%+ match funding. Use the free eligibility check to confirm.

How long is the application process?

EoI window typically 6-12 weeks. Full application 12 weeks. Technical review 3-9 months. Total: 9-15 months from EoI to award. Pre-application preparation should start 6-12 months before window opens.

What are typical IETF awards?

Range £100k-£14m per project. Phase 3 average was around £1.1m. Small projects under £500k follow a streamlined route.

Should I use a grant writer?

Strongly recommended for projects above £400k. Specialist grant writers cost £15k-£40k but materially improve win rates. Below £400k, the application effort doesn't justify the professional fees.