Industrial Energy Transformation Fund for solar PV

IETF 2026 guide — match-funded grants of 30-50% for energy-intensive industry in England, Wales, NI. Eligible sectors, application windows, solar PV examples.

Overview

The Industrial Energy Transformation Fund (IETF) is the UK government's flagship grant scheme for decarbonising energy-intensive industry. Administered by the Department for Energy Security & Net Zero, it provides match-funded capital grants of typically 30-50% of project capex to industrial sites in eligible sectors — manufacturers, food and drink processors, paper mills, chemical plants, steel and metals, ceramics, glass, cement, automotive assembly.

Solar PV is an eligible technology under the IETF's energy efficiency strand, particularly when paired with battery storage, behind-the-meter consumption optimisation, or process electrification. The grant is not a standalone solar grant — applicants must demonstrate the project delivers measurable energy savings or carbon reduction against a clearly defined industrial process baseline. But for sites with the right sectoral fit and a credible decarbonisation narrative, the IETF can subsidise 30-50% of a multi-million-pound rooftop solar project.

Key facts at a glance

Eligibility criteria

• Site must be in an eligible Standard Industrial Classification (SIC) code. Manufacturers covered by Climate Change Levy main rates qualify automatically; some service sectors (e.g. data centres) are excluded.
• England, Wales and Northern Ireland — Scotland has a separate parallel scheme managed by Scottish Enterprise / Scottish Government.
• Project must deliver a measurable reduction in energy use, energy emissions, or both, against a 12-month baseline period.
• Minimum project cost typically £100,000 (small project route) or £500,000 (large project route).
• Applicant must contribute 50-70% match funding from own resources or other non-government sources (including private finance, parent company equity, or asset finance).
• Pre-application Expressions of Interest are required — projects already started cannot apply.
• State aid (now subsidy control) rules apply — the grant is treated as a notifiable subsidy.

How to apply

Step 1 — Monitor for the next funding round.

Phase 3 closed in 2024. Phase 4 is expected to open in Q2 2026 with around £100m available. Sign up to DESNZ email alerts and check the IETF page on gov.uk monthly.

Step 2 — Prepare the Expression of Interest (EoI).

This is a 2-3 page document outlining the project, expected energy savings, indicative budget, and your match funding. EoIs are typically due 8-12 weeks before the full application deadline.

Step 3 — Engage an energy auditor for the technical baseline.

IETF applications require a robust baseline energy consumption figure (typically ISO 50001-compatible) and a forecast saving. Most applicants hire an external energy consultant — budget £15k-£40k for this work.

Step 4 — Submit the full application.

Includes detailed engineering design, supplier quotes, financial modelling, project plan, environmental impact assessment, and procurement plan. Typical preparation effort: 12-16 weeks.

Step 5 — Independent technical review.

DESNZ assigns an independent technical assessor. This phase can take 3-4 months and may include site visits.

Step 6 — Award and contracting.

Successful applicants sign a Grant Funding Agreement with detailed milestones. Grant is paid in arrears against verified expenditure and energy savings.

Step 7 — Post-project monitoring.

Five years of energy data reporting to DESNZ to verify the realised savings.

Eligible sectors

• Food and drink manufacturing (the largest sector by IETF awards to date)
• Chemicals and pharmaceuticals manufacturing
• Pulp, paper and board manufacturing
• Glass, ceramics and refractories manufacturing
• Cement, lime and gypsum manufacturing
• Iron, steel and metals processing
• Automotive assembly and components
• Heavy engineering and machinery
• Textiles and clothing (subject to qualifying SIC code)
• Plastics and rubber processing

Stacking with other grants and reliefs

Most successful 2026 commercial solar projects use a combination of schemes — this is where independent advice earns its keep. Industrial Energy Transformation Fund for solar PV typically combines well with:

• Full Expensing for business solar PV — 100% first-year deduction — no upper limit
• Annual Investment Allowance for business solar — Up to £1 million per year, 100% first-year deduction
• Smart Export Guarantee for businesses — 3p–15p per kWh exported (2026 fixed tariffs)

Sources & further reading

• IETF guidance on gov.uk
• DESNZ IETF Phase 3 summary of awards
• Energy and Carbon Trust IETF support pages

Frequently asked questions