IETF Phase 3 is closed — what UK manufacturers can use instead
The Industrial Energy Transformation Fund Phase 3 closed to new applications after the Spring 2024 round. No Phase 4 has been announced for English manufacturers. But the alternative stack — AIA + 0% VAT — delivers better economics than IETF Phase 3 for most profitable industrial businesses.
Last round closed Spring 2024. Existing awards delivering through 2026–2028. No Phase 4 announced as of May 2026. Scottish IETF remains open for Scottish manufacturers.
What IETF Phase 3 was — and what replaced it
IETF Phase 3 provided capital grants of up to 30% for manufacturing and industrial businesses making energy efficiency or fuel-switching investments above £100k. It was competitive, application-heavy and UK-wide (England, Wales, Scotland). These six routes are the active 2026 alternatives.
Annual Investment Allowance
Permanent — no end date100% first-year capital allowance on solar plant, heat pumps, BESS and energy efficiency equipment. At 25% CT rate, saves £25,000 on every £100,000 of qualifying capex. No application, no competition round, no ceiling. Applies to all qualifying plant installed in the accounting period.
0% VAT on commercial solar
Open — no end dateCommercial solar installations now qualify for 0% VAT, extended from the domestic rate. Applied at invoice by your installer. On a £500k installation, saves approximately £85,000 versus the 20% standard rate. Can be combined with the Annual Investment Allowance — they apply to different elements of cost.
Scottish Industrial Energy Transformation Fund (SIETF)
Open — rolling roundsDevolved equivalent of English IETF, administered by Scottish Government. Manufacturing, food processing, chemicals, data centres with high energy intensity in Scotland. Competitive rounds — applications assessed on energy intensity, carbon reduction and economic development criteria.
Local Growth Fund
Open — through 2028Replaces UKSPF (closed 31 March 2026) in 11 Mayoral Strategic Authority areas: GMCA, WYCA, LCRCA, NECA, NTCA, TfN, SYMCA, WMCA, CPCA, East Midlands, York & North Yorkshire. Each MA has its own Investment Plan with energy and industrial decarbonisation themes. SMEs in these areas can access capital grants through LA economic development teams.
Power Purchase Agreement (PPA)
Always availableThird-party funds the solar installation in exchange for a fixed-price electricity supply agreement at 6–9p/kWh below grid rates. No capital required, no grant application. Annual savings of £40k–£200k depending on site size. PPA terms typically 15–25 years. Exit provisions and buyout clauses negotiable. We arrange PPA procurement at no cost to client.
Salix BAU loans (public sector manufacturers)
Open — no end dateNHS catering, university research facilities, council waste processing and MOD manufacturing sites qualify as public sector bodies for Salix BAU interest-free loans. Repayments sized to match modelled energy savings. Separate from PSDS (which closed November 2024).
IETF Phase 3 vs the 2026 alternative stack — worked example
£800,000 industrial solar installation at an English manufacturer. Profitable company paying 25% corporation tax.
What you would have received
What you can access today
For sites in Mayoral Authority areas or Scottish manufacturers, add Local Growth Fund or Scottish IETF to reduce the net cost further. For zero-capex delivery, a PPA eliminates capital outright.
IETF Phase 3 FAQs
What happened to IETF Phase 3?
Is there an IETF replacement for English manufacturers?
Can I still get a grant for industrial solar in England?
What was IETF Phase 3 worth — and is the Annual Investment Allowance comparable?
When is IETF Phase 4 expected?
Is Scottish IETF still open?
Find the best post-IETF funding stack for your industrial site
Free review — the Annual Investment Allowance modelling, PPA options, Local Growth Fund and Scottish IETF eligibility checked. Response within one working day.
No obligation. We don't charge for grant scoping.
Funding by asset class
The allowance depends on the asset, and most pages on this topic get it the wrong way round. Solar PV is special-rate expenditure (HMRC Capital Allowances Manual CA22335), so the 100% year-one route is the Annual Investment Allowance — Full Expensing is a main-rate measure and does not reach it. Battery storage, EV charging and heat pumps are main-rate plant, so Full Expensing genuinely does apply to those.
- what a commercial heat pump actually costs in 2026
Main-rate plant, so Full Expensing does apply here.
- what commercial battery storage costs per kWh
Main-rate plant. Stacks with solar for self-consumption.
- the real cost of a commercial solar install
Capex bands per kWp before any relief.
- industrial rooftop solar economics
Large roofs, high daytime load — the strongest case.
- claiming the Annual Investment Allowance on solar
Solar is special-rate, so AIA is the 100% year-one route.
Find out which 2026 schemes your site actually qualifies for
- 1. A short written funding note naming every scheme your site qualifies for in 2026 — and the ones it does not.
- 2. Indicative system size and a capex band for your roof.
- 3. Year-one tax treatment per asset in £ — solar is special-rate expenditure, so the route is the Annual Investment Allowance; battery storage and heat pumps are main-rate plant, where Full Expensing does apply. Most pages get this the wrong way round.
- 4. Projected SEG export revenue at current rates.
- 5. Any red-flag eligibility or DNO issues we can see up front.
Covers solar PV, battery storage, EV charging and commercial heat pumps — separately or as one bundled project. If your project is a heat pump or a battery rather than a roof, say so in the message box and the note is written against that asset instead.
- · We do not pass your details to multiple installers.
- · We do not run a lead auction, and we never ask for your phone number.
- · No marketing lists, no unsolicited calls.
- · We are an independent funding consultancy — not an installer, and we take no installer commission.
Commercial solar grants & funding
Every active 2026 route to fund commercial solar — grants, tax allowances and loans — with the eligibility and application detail behind each.
Pillar guideCommercial solar grants & incentivesThe master guide to what is open and closed in 2026.- Commercial solar panel grantsGrant routes for rooftop and ground-mount PV.
- Solar grants for businessesFunding by business type and size.
- UK government solar grantsCentral and devolved government schemes.
- Annual Investment Allowance on solar25% effective tax saving, no application.
- Annual Investment AllowanceAIA on solar capital expenditure.
- Solar tax reliefEvery capital allowance that applies to PV.
- Salix funding (public sector)Interest-free loans for schools and the NHS.
- Salix Finance loansHow the Salix loan mechanism works.
- Local Growth FundMayoral and combined-authority funding.
- Rural England Prosperity FundCapital grants for rural enterprises.
- How to apply for a solar grantThe step-by-step application process.
- Grant eligibility checkerFind the schemes your site qualifies for.