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Energy Solutions

VAT rate on supply and installation of solar panels to be abolished

The move is expected to be signed off by the Government this week.

ENVIRONMENT MINISTER EAMON Ryan has announced that VAT on the supply and installation of solar panels on homes and public buildings is to be abolished.

The 23% VAT rate will be reduced to 0% and is expected to save householders an additional €1,000 and reduce the payback period by nearly a year

The move, set to be signed off by the Government this week, will mean a saving of approximately €1,000, bringing the average installation cost of €9,000 down to €8,000.

When combined with the SEAI solar grant of up to €2,400, this means that the total average home solar installation will come down even further to about €5,600.

Ryan said the move will give people cheaper renewable energy and reduce their payback period by nearly a year, from seven years to 6.2 years (based on average 4.5KW installation).

He said it was another step on Ireland’s journey to cleaner, cheaper, renewable energy.

“It comes on the back of our on-target retrofitting programme and our micro-generation scheme which is seeing thousands of householders signing up to sell their excess renewable energy back to the grid,” he said.

The Government has set a target to reach 5GW of solar energy by 2025, increasing this to 8GW by 2030. 

It also plans to put solar panels on all schools across the country by 2025. 

“Just 1GW is enough to power about 750,000 homes. There is a solar rooftop revolution happening and Government can now help make it more even affordable for people to make the switch to effective and cheaper solar power,” Ryan added.

The VAT change will be introduced in the Spring Finance Bill following a recent amendment to the EC VAT Directive.

Welcoming the announcement, CEO of the Irish Solar Energy Association (ISEA) Conall Bolger said investing in solar is among the most positive and proactive steps any individual or household can take to combat the climate crisis.

“The removal of VAT on domestic solar follows measures introduced last year to remove the need for planning permission and to allow households sell excess electricity back to the grid,” he said.

“This series of measures combine to mean that it has never been easier or more cost effective to embrace solar. It will make it a bit easier for hard pressed consumers to participate in the solar revolution. Customers can decarbonise and see a permanent saving on their energy bill.

“Ireland now has a target to deliver 5,000MW of solar by 2025, this ambitious goal will require households across the country ‘going solar’.”

There are almost 50,000 Irish homes with solar panels already – a number that is expected to grow at an increasing pace as the technology becomes cheaper and more mainstream.

As of last October, planning permission is no longer required to install solar panels on houses and certain non-domestic buildings.

However, chair of the Micro-Renewable Energy Federation Pat Smith recently told The Journal that challenges navigating the system to avail of grants for solar panels are holding back some businesses and farmers from applying.

Smith described the experience of trying to secure a grant for some as a “bureaucratic nightmare”.

He said Ireland needs “an easy, accessible grant support system that empowers people to make positive decisions about adopting renewables now rather than at some point in the future”.