Industrial Energy Transformation Fund (IETF)

The IETF is closed. On 3 July 2025, following the 2025 Spending Review, the government confirmed the fund will not continue. There will be no further extension, the planned second competition window of Phase 3 will not go ahead, and no successor fund has been set out. As of mid-2026 there is no open window and nothing accepting new applications. The gov.uk collection page still shows the fund closed to new applications, and only projects already selected in earlier rounds are being delivered to completion.

The government flagged that future support for industrial decarbonisation would be set out in a separate Carbon Budget and Growth Delivery Plan. If anything comes of that, treat it as a distinct, as-yet-undefined route, not the IETF. We will not point you at a fund that has been wound down, and we will not imply a replacement exists before one is confirmed.

Even at its peak the IETF was narrow. The lead applicant had to be a business carrying out an eligible industrial activity, meaning an energy-intensive site with operational processes such as manufacturing or processing. Phase 3 widened the scope to include data centres and controlled-environment horticulture and agriculture. Public-sector bodies, universities, councils and schools could not lead an application; they could only join as project partners. Energy and emissions savings had to be measurable at site level. A typical commercial business with a roof to fill never sat in that category.

The IETF was a competitive grant fund run in time-limited windows. It funded three strands: feasibility studies, engineering studies, and the deployment of energy-efficiency and deep-decarbonisation measures. Grants covered a percentage of eligible costs, with the subsidy intensity varying by company size and location and deep-decarbonisation deployment typically capped around 85%.

Here is the part that settles it for solar. The IETF explicitly excluded solar PV. The guidance stated that the costs of purchasing, installing and maintaining renewable electricity generation equipment such as solar panels were not supported. Only solar thermal, generating direct process heat to replace a fossil fuel, was eligible. The fund targeted process heat, heat recovery, fuel switching and efficiency at heavy-industry sites. It was never going to fund a photovoltaic array on a warehouse, a factory office or a logistics shed.

Phase 3 was a £185m programme running across 2024 to 2028. Its only competition window opened on 29 January 2024 and closed on 19 April 2024. No window has opened since and none is planned. When open, the minimum grant thresholds were £100,000 for large companies and £75,000 for SMEs. The Autumn 2024 Budget committed £163m to complete existing Phase 1, Phase 2 and first Phase 3 window projects. There are no live deadlines in 2026 because the scheme is closed. We quote these so you can see the scale and judge the fit, not to suggest any of it is available now.

An Alectrona commercial solar customer cannot realistically use the IETF, for two compounding reasons. First, it is closed, with no successor announced, so there is no live route at all in 2026. Second, even when it was open it was the wrong scheme for solar PV: it was aimed at energy-intensive heavy industry, it required leadership by an industrial business, and it explicitly excluded the cost of solar panels and other renewable electricity generation. Only a genuine heavy-industry client doing process decarbonisation, such as solar thermal for process heat, fuel switching or heat recovery, ever fitted, and that door is now shut. We would rather say that plainly than build a case around money that is not there.

For the great majority of private commercial buyers, the honest route is still capex: buying the system outright. It is the route we recommend wherever the capital is available, because you own a roughly 25-year asset from day one and keep every pound of the saving and the relief. The supporting routes that genuinely apply to a private site are these:

• Capital allowances on a bought system. Solar PV is a special-rate asset, and the Annual Investment Allowance gives a 100% first-year deduction within the £1m annual limit. Full expensing does not apply to solar, so the AIA is the route to that first-year relief. This is indicative, not tax advice; confirm your own position with a qualified accountant. See our capital allowances page.
• SEG and export income. The Smart Export Guarantee pays for the surplus you send to the grid. It pays far less per unit than the power you avoid buying, so the value is in self-consumption first, with export as a way to monetise what is left over. See our SEG and export page.
• PPA or leasing, if cash flow matters more than total return. A power purchase agreement puts solar on the roof with no capital outlay, and leasing or hire purchase spreads the cost over time. Both trade some of the return for easier cash flow, and a PPA largely benefits the funder who owns the asset. See our PPA and leasing pages.

If you are an eligible industrial or public-sector body, it is worth checking the grants hub for the schemes that are genuinely aimed at those organisations, with the standing caveat that windows open and close and the rules change. For everyone else, the better call is capex, claimed through capital allowances, with your own figures modelled from an on-site survey rather than a rule of thumb. None of this is financial or tax advice, and we do not act as your tax adviser; confirm the position with a qualified accountant before you commit.