Installing solar panels on your factory isn’t just about cutting your electricity bill…

It’s also about capitalising on some of the most generous incentives available to UK businesses in 2025.

In this guide, we’ll break down the key solar incentives UK factory owners can claim in 2025.

1. Capital Allowances: The Big One for Manufacturers

Capital Allowances allow UK businesses to deduct the cost of qualifying equipment—like solar panels—from their taxable profits. For factory owners, this can significantly reduce Corporation Tax liabilities.

Key Programmes in 2025…

Full Expensing (100% First-Year Allowance):

UK businesses can deduct 100% of the cost of new solar PV systems (as long as they’re considered “plant and machinery”) from their taxable profits in the first year.

This includes:
✅ Solar panels
✅ Inverters
✅ Mounting structures
✅ Cabling and electrical infrastructure

Example:
You install a £250,000 solar PV system on your factory roof. With full expensing, you can deduct the full amount from your taxable profit this year—potentially saving £47,500 (based on a 19% Corporation Tax rate).

Annual Investment Allowance (AIA):

The AIA lets businesses deduct up to £1 million of qualifying capital investments each year. Most solar systems fall under this, and it can be used alongside or as a fallback to full expensing.

2. Smart Export Guarantee (SEG)

The Smart Export Guarantee is a UK government scheme requiring licensed electricity suppliers to pay businesses for exporting excess solar electricity back to the grid.

For factories that don’t consume all their solar generation – such as those with weekend shutdowns or night-heavy shifts – SEG provides a modest revenue stream.

3. Renewable Energy Guarantees of Origin (REGO Certificates)

If you own your solar PV system and want to monetise your environmental impact, you can apply for REGO certificates. These certify that the electricity you produce is 100% renewable and can be sold to buyers looking to improve their green credentials.

While not always high-value, REGOs are increasingly sought after by large corporations under Scope 2 reporting frameworks. Some suppliers offer buy-back programs for REGO certificates bundled with energy export.

4. Industrial Energy Transformation Fund (IETF) – Phase 3 (Expected in 2025)

This is a targeted scheme aimed at energy-intensive industries.

While not always open, new funding rounds are anticipated in 2025 under Phase 3.

5. What About Renting a Solar System?

If you are installing solar panels through a rental agreement, the system provider (not your factory) owns the equipment – so they typically claim the tax incentives and export income.

However, you still benefit from discounted energy, improved ESG reporting, and reduced grid dependence – all with no upfront cost.

Conclusion…

With full expensing, export income, REGO sales, and potential rental, installing solar panels can become one of your smartest financial moves this year.

…don’t leave money on the table.