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Sector guide · Updated 12 May 2026

Solar panel grants for factories & manufacturers

UK manufacturers were the largest single beneficiaries of industrial solar grant money while the Industrial Energy Transformation Fund ran — energy-intensive sites from food and drink processing to chemicals, paper mills, automotive assembly and heavy engineering qualified for it — and they are the sector most exposed by its closure: DESNZ confirmed in July 2025 that there will be no further IETF phase and no successor fund. The stack that remains is tax-led: the AIA on the system capex (100% year-one relief on the first £1m, then the 50% first-year allowance), full expensing on any main-rate plant bought alongside, and SEG income on the export. A typical 500kWp factory rooftop still recovers 25p per £1 of capex through corporation tax relief in year one and pays back in four to five years.

Last reviewed 12 May 2026 3 min read By Sector guides
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Sector snapshot

Typical buyerOperations Director / Energy Manager
Typical system size150 kWp – 1.5 MWp typical
Typical project value£120,000 – £1,200,000
Annual electricity demand300,000 – 4,000,000 kWh

Why factories & manufacturers are buying solar in 2026

High and predictable daytime load

Factory production runs typically match solar generation hours — particularly food processing, plastics, automotive and engineering. Self-consumption rates of 75-90% are achievable on most factory rooftops.

Large unshaded roof area

Modern industrial portal-frame buildings provide 800-3,000 m² of unshaded rooftop area. Most can accommodate 200-1,500 kWp of solar PV without structural strengthening.

Roof refurbishment cycle

Many UK factories are at the 20-30 year roof refurbishment point — making integrated solar-plus-roof economically compelling. Re-roof + solar typically beats re-roof alone in cost per m² when amortised over 25 years.

Climate Change Levy exposure

Manufacturers on CCL main rates pay an additional ~0.6p/kWh on imported grid electricity. Self-consumed solar avoids the CCL entirely — adding £6,000+ per year of additional saving on a 100,000 kWh self-consumption profile.

Carbon disclosure pressures

Tier 1 supply chains (automotive, retail, pharma) require Scope 2 reporting and increasingly Scope 3 — making credible on-site renewable generation a contract retention factor, not just a cost saving.

The primary grant stack for this sector

These are the schemes most likely to apply to a typical project in this sector. Click through for full eligibility, application process and worked examples.

Tax relief

Annual Investment Allowance for business solar

Amount: Up to £1 million per year, 100% first-year deduction

AIA 2026 guide — how UK businesses claim 100% first-year tax relief on commercial solar PV up to £1m. Eligibility, calculation worked examples, group cap rules....

Income scheme

Smart Export Guarantee for businesses

Amount: 3p–15p per kWh exported (2026 fixed tariffs)

Smart Export Guarantee 2026 guide for UK businesses — best export tariffs, eligibility for 50kWp+ systems, how to register, and how to combine SEG with AIA / Fu...

Plus secondary options:

Sub-sector breakdown

Different parts of this sector have different load profiles, building types and grant eligibility.

  • Food & drink manufacturing — Was the largest IETF beneficiary sector (fund closed July 2025). Refrigeration load matches solar profile perfectly. Bakeries, breweries, dairies, fresh produce packers all suited.
  • Automotive assembly & components — Three-phase G99 connections often constrain export — pair with battery storage. Tier 1 supplier ESG mandates drive faster approvals.
  • Plastics & rubber processing — Extruders, injection moulders run high heat process load — combine PV with process electrification — the case the IETF funded before it closed.
  • Pulp, paper & board — Often qualifies for Energy Intensive Industry Compensation. PSDS-style grant routes more constrained.
  • Chemicals & pharmaceuticals — High Cleanroom and process load. Tier 1 ESG disclosure typically the strongest single driver.
  • Aerospace & precision engineering — Often large clean-floor footprint with high daytime electrical demand. Roof access can be a constraint.
  • Glass, ceramics, cement — Energy-intensive — was an IETF candidate; tax relief leads now. Roof condition often a constraint on older sites.
  • Metals & foundries — Heavy daytime load. Was IETF territory; battery integration valuable for managing peak charges.
  • Heavy engineering, fabrication — Variable load profile; battery integration often economic. SEG export valuable in low-load months.
  • Textiles, clothing, leather — Lower energy intensity per m² — AIA-led stack.

Sector case study

Case study — Mid-size automotive component manufacturer, Coventry, 720kWp installed 2025.

The site occupies a 12,000 m² portal-frame manufacturing unit on the Coventry north industrial corridor. Annual baseline electricity import: 2.1 GWh; annual gas: 1.4 GWh; carbon footprint Scope 1+2 approximately 740 tCO2e. A Tier 1 customer (German OEM) updated its 2024 supplier code requiring Scope 1+2 emissions disclosure and a credible decarbonisation roadmap by end-2025.

The project delivered 720 kWp of rooftop PV (1,680 panels), 480 kWh of battery storage, and replaced compressed air with VSD compressors and an ammonia chiller upgrade. Capex: £720,000 total; IETF grant: £210,000; net cost £510,000. First-year AIA tax relief: £127,500. Effective net cost after tax: £382,500. Annual savings (year one): £138,000 in electricity import avoided + £6,400 SEG + £8,200 REGO sales. Payback: 2.8 years.

The Tier 1 audit completed in Q2 2026 with no findings. The contract — worth £8m annually — was retained.

Sector-specific watch-outs

  • G99 export limits. Many DNOs impose a 50-100 kW export cap on rural factory sites — exceeding this needs a major network upgrade. Always check DNO capacity early.
  • Roof structural assessment. Older portal-frame buildings may need structural surveying before installing >250 kWp. Budget £2,500-£8,000 for a Cat 2 structural assessment.
  • Process electrification dependencies. Many manufacturers can extract more value by combining PV with process electrification — but the engineering case takes 12-18 months to develop.
  • Climate Change Agreement (CCA) interaction. Energy-efficiency projects (including the IETF-funded ones still in delivery) can affect your CCA energy-use baseline — get specialist advice.
  • Fire risk classifications. Industrial rooftop solar requires ESS Class IV fire risk classification on lithium battery installations. Material insurance premium impact possible.
Donovan Fawcett · Director, SEO Dons Ltd Twelve years in UK commercial solar SEO and grant advisory. Editorial policy & independence.
FAQs

Solar panel grants for factories & manufacturers · FAQs

What is the typical capex for solar on a 5,000 m² UK factory?

A 5,000 m² industrial roof typically accommodates 350-500 kWp of solar PV. At 2026 prices, expect £280,000-£420,000 installed (excluding battery storage). After AIA tax relief (solar is special-rate, so full expensing does not apply), net cost is around £210,000-£315,000 for a limited company at the 25% corporation tax rate.

Did the IETF apply to factories?

It did, until the fund closed in July 2025: the IETF supported manufacturing sites with Climate Change Levy main-rate liability across food, drink, chemicals, paper, metals, glass, ceramics and similar sectors, scoring energy-efficiency and decarbonisation projects with material savings (typically 100,000+ kWh/year or 50+ tCO2e/year). DESNZ has confirmed no further phase and no successor fund. What replaced it.

Can a factory claim AIA on top of a grant?

Yes — the AIA applies to your post-grant capex. If a regional grant funded 40% of a £500k project, you can claim the AIA on the remaining £300k. Effective tax relief at 25% main CT rate: £75,000 — bringing the net cost to £225,000.

How does solar affect Climate Change Agreement targets?

Self-consumed solar reduces your imported electricity, which directly improves your CCA energy ratio. Exported solar does not count towards your CCA — so size the system for high self-consumption to maximise CCA benefit.

What is the SEG income for a 500kWp factory system?

At a typical 25% export rate (after high daytime self-consumption) and a 5p/kWh SEG tariff, a 500 kWp system exports approximately 125,000 kWh/year and earns about £6,250/year of SEG income. Best fixed rates in 2026 can lift this above £10,000/year.

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