Blog · Published 2026-05-12

IETF Phase 4 preparation: there is no Phase 4 — the fund closed in July 2025, so plan without it

This post was written in May 2026 on the assumption that Phase 4 of the Industrial Energy Transformation Fund would open in Q2 2026 with around £100m available. That assumption was wrong and the copy has been withdrawn: following the 2025 Spending Review, DESNZ decided there would be no further extension of the IETF and that no successor fund is planned, and Phase 3's planned second window was cancelled (gov.uk collection page, updated 25 June 2026). The last window closed on 19 April 2024. What follows is what an energy-intensive manufacturer should do with the preparation work instead.

What was expected, and what actually happened

- Expected (May 2026 copy): Phase 4 opening April-June 2026, ~£100m, small and large project routes, England/Wales/NI. - Actual: 3 July 2025 — no further extension of the IETF; the planned second Phase 3 competition window will not take place; no successor fund. The 2024 Autumn Budget committed £163m only to finish Phases 1, 2 and the first Phase 3 competition. - Scotland: the separate SIETF shows all three calls closed and no reopening date (gov.scot, checked September 2026).

There is nothing to be application-ready for. Any adviser pricing an IETF grant into a 2026 or 2027 project is pricing money that does not exist.

What to do with the preparation work you have already done

Most of the pre-application workstreams keep their value without the grant:

1. Energy baseline. Twelve months of half-hourly data broken down by process, ISO 50001-compatible, is exactly what ESOS, a Climate Change Agreement target and a Tier 1 customer's Scope 3 questionnaire ask for. 2. Project shortlist. Rank the 2-3 candidate projects by post-tax IRR rather than grant-adjusted IRR. Solar on a high-daytime-load roof usually still clears the hurdle on the AIA alone. 3. Technical design. RIBA Stage 2-3 design, supplier quotes and single-line diagrams are what an asset-finance lender or PPA provider will ask for. 4. Match-funding evidence. The bank facility letter or asset-finance pre-approval now funds the whole project instead of the applicant's share — the paperwork is the same. 5. Subsidy control review. Still relevant for any regional grant you stack. 6. Governance. Board approval for a self-funded programme is easier to get with the grant uncertainty removed.

The economics without the grant

A worked example at the scale IETF bids used to run:

- 850 kWp rooftop on an East Midlands automotive supplier, capex £720,000 - AIA on the first £1m of qualifying spend: 100% relief; at 25% corporation tax that is £180,000 back in year one - Annual savings on 60% self-consumption at 22p/kWh plus SEG and REGO on the export: about £120,000 - Net cost after tax relief £540,000; simple post-tax payback about 4.5 years, before any Freeport allowance or regional grant

That is slower than the 2-3 year payback an IETF-funded package delivered — and still comfortably inside the panels' warranty life. The projects that lose most from the closure are the integrated process-electrification packages, which carried the grant's share of capex; those now compete for capital on their own returns.

Where grant money still exists for manufacturers

- Regional growth-hub programmes — capital grants in rounds (West Midlands BEAS up to £100k; Tees Valley Resource Efficiency Fund up to £25k; Y&NY; WECA). Check the current call — they open and close. - Freeport tax sites — enhanced capital allowances on plant and machinery for sites inside the boundary. - Devolved routes — Business Wales / Development Bank of Wales lending; Scotland's SME Loan Scheme; Invest NI's account-managed programmes. - Customer co-funding — supplier sustainability programmes co-fund more installations than most manufacturers expect.

None of these replaces a 30-50% IETF grant on a £2m programme. The honest position for 2026 is that industrial solar stands on tax relief, self-consumption and export income.

FAQs

FAQs on this topic

Can my business apply for IETF Phase 4?

No — there is no Phase 4. DESNZ confirmed in July 2025 that the IETF would not be extended and that no successor fund is planned. Use the free eligibility check to map the routes that are still open.

When did the last IETF window close?

19 April 2024, the end of the Phase 3 Spring 2024 competition. The second Phase 3 window that had been planned was cancelled.

What did the IETF pay?

Match-funded grants of typically 30-50% of project costs across Phases 1-3 — for the record only; no new awards are being made.

Should I still use a grant writer?

Not for the IETF. For regional growth-hub rounds above £50k a specialist can still pay for themselves; below that the fees rarely do.