Decarbonising homes, businesses, and public buildings can be a costly process, but the UK government and banks provide a number of funding options to make this transition easier. From grants and loans to incentives, there are financial schemes available for those looking to improve energy efficiency, reduce carbon emissions and adopt renewable energy technologies.
This article will break down the key decarbonisation funding options available for businesses, homeowners and public institutions, helping you find the support you need to achieve your sustainability goals.
💡 What is decarbonisation? Find out everything you need to know in our comprehensive guide.
Grants for decarbonisation
Grants are a popular funding option for those seeking to decarbonise. They provide non-repayable financial support for specific projects aimed at encouraging the adoption of low-carbon technologies and improving energy efficiency. Here are some of the main grant options available:
Public Sector Decarbonisation Scheme (PSDS)
For public institutions such as schools, hospitals, and government offices, the Public Sector Decarbonisation Scheme offers grants to fund low-carbon upgrades like heat pumps, solar panels, and insulation improvements. The scheme is designed to reduce carbon emissions from public sector buildings and help them achieve net zero.
📕 Read our handy explainer of the Public Sector Decarbonisation Scheme here.
Boiler Upgrade Scheme
Homeowners looking to replace old gas boilers with low-carbon alternatives can apply for the Boiler Upgrade Scheme. The UK government offers grants of up to £7,500 to install air-source or ground-source heat pumps, which are more energy-efficient and eco-friendly.
Social Housing Decarbonisation Fund (SHDF)
The SHDF provides grants to improve the energy efficiency of social housing. Housing associations and local authorities can apply for funding to retrofit homes, install energy-efficient systems, and reduce tenants’ energy bills. The scheme supports upgrades such as insulation and low-carbon heating.
🏡 Check out our guide to the Social Housing Decarbonisation Fund here.
Loans for decarbonisation
Salix Finance loans
Salix Finance offers interest-free loans to public sector organisations for energy efficiency projects. These loans can be used to fund a range of decarbonisation measures, from upgrading lighting systems to installing energy-efficient heating. The goal is to help public sector bodies reduce their energy consumption and emissions without facing upfront costs.
Green business loans
Many financial institutions, such as Lloyds Bank and Natwest, offer green loans specifically tailored for businesses aiming to reduce their carbon footprint. These loans often come with lower interest rates and can be used to fund projects like renewable energy installations, electric vehicle fleets, and building upgrades.
Green home finance
For homeowners, green finance options are becoming increasingly available. Some banks offer green mortgages or loans to support energy-efficient home improvements, such as installing solar panels, battery storage, or upgrading to triple glazing. These loans usually come with better terms than traditional loans.
Incentives for decarbonisation
Incentives offer financial rewards for adopting energy-efficient or renewable energy systems. These schemes encourage both businesses and homeowners to invest in low-carbon technologies.
- The Smart Export Guarantee (SEG) incentivises homeowners and businesses to install solar panels or other renewable energy systems. Under the SEG, energy suppliers pay you for any excess electricity you generate and export back to the grid, helping you recoup some of the costs of installation.
- The Energy Company Obligation (ECO) scheme requires large energy suppliers to help homeowners and low-income families make energy-efficient improvements to their homes. This can include insulation, boiler replacements, and other measures aimed at reducing energy use and carbon emissions.
- The UK government offers a variety of incentives for businesses and individuals looking to switch to electric vehicles. These include grants for installing EV charging points and tax breaks for purchasing electric cars or vans. Businesses can also benefit from lower company car tax rates when they choose electric vehicles.
Choosing the right decarbonisation funding option for you
When deciding on the best funding option for your decarbonisation project, it’s important to consider:
- Eligibility: Some grants and loans are only available to specific sectors, such as public bodies or homeowners.
- Project scope: Larger projects, such as full building retrofits, may require a combination of grants, loans, and incentives.
- Repayment terms: If you’re considering a loan, review the repayment terms carefully to ensure it aligns with your financial planning.
- Long-term savings: Many decarbonisation projects result in significant long-term savings on energy bills, which can help offset initial costs.
Start your decarbonisation journey with Oakray Renewables
If you’re considering your options for decarbonisation, whether for your business, home or organisation, Oakray Renewables can help. Our team specialises in providing tailored renewable energy solutions, including solar energy systems, heat pumps, and battery storage. We can also guide you through the funding options available, ensuring that you maximise your access to grants, loans, and incentives.
