IETF Grant 2026: UK Industrial Solar + Decarbonisation

The Industrial Energy Transformation Fund (IETF) is the UK government's principal grant route for decarbonising private-sector heavy industry. Phase 3 is active across 2024-2027 with approximately £500m of capital to deploy. Awards typically run 15-30% of eligible project cost, from £100k for small studies up to £30m+ for large deployment projects. This guide explains what IETF funds, who qualifies, how to assemble a winning bid, and how solar PV fits into a credible industrial decarbonisation package.

How IETF works

IETF is administered by Salix Finance Ltd on behalf of the Department for Energy Security and Net Zero (DESNZ). The fund supports two project types:

Studies — feasibility and engineering studies, grant intensity up to 50% of study cost. Typical award size £25,000-£500,000. Funded studies must demonstrate a credible path to a follow-on deployment project.
Deployment — capex grants for the implementation of energy efficiency or decarbonisation projects. Typical grant intensity 15-30% of eligible capex. Typical award size £100,000-£30,000,000+.

The fund prioritises projects that deliver large, verifiable carbon savings per £ of grant. It complements the public-sector-focused Salix Finance / PSDS programme and is one of three principal routes (with AIA tax relief and SEG export tariffs) by which UK industrial businesses access decarbonisation capital.

Who qualifies — sectors and SIC codes

IETF targets "energy-intensive industries" defined by SIC code. Eligible activities (current Phase 3 guidance):

Manufacture of food products and beverages (SIC 10, 11) — including dairies, breweries, mills, processed food manufacturers.
Textiles, leather, and clothing (SIC 13, 14, 15).
Pulp, paper and paperboard (SIC 17) — including corrugated and packaging manufacturers.
Chemicals and chemical products (SIC 20) — basic chemicals, industrial gases, agrochemicals, paints.
Pharmaceuticals (SIC 21) — including API manufacturing and biotech production sites.
Rubber and plastic products (SIC 22) — moulding, extrusion, recycling facilities.
Non-metallic mineral products (SIC 23) — cement, lime, plaster, glass, ceramics, refractories.
Basic metals (SIC 24) — iron, steel, aluminium, copper, foundries.
Fabricated metal products (SIC 25) — structural metalwork, engineering, tools.
Computer, electronic, optical products (SIC 26) — limited eligibility, typically only larger semiconductor and electronics facilities.

Sectors that do not qualify: retail, hospitality, logistics and warehousing (outside of food-processing logistics), most office-based businesses, primary agriculture, mining, oil and gas extraction.

Real IETF award sizes for solar + integrated projects

Award sizes from published Phase 1, 2, and 3 award rounds for projects including solar PV:

Dairy with rooftop solar + heat pump: £2.4m grant on £8.5m project (28% intensity). 1.2 MW PV + 2 MW heat pump + thermal store.
Brewery with process electrification + ground-mount solar: £6.8m grant on £24m project (28% intensity). 3.5 MW solar PV + electric boiler conversion + heat recovery.
Paper mill with CHP replacement + rooftop solar: £4.1m grant on £18m project (23% intensity). 800 kW solar + electric steam boiler.
Plastics manufacturer with compressed-air retrofit + solar: £680k grant on £2.8m project (24% intensity). 500 kW rooftop PV + air-system replacement.
Cement works carbon-capture feasibility study: £350k study grant (50% intensity, study not deployment).

Award notices are published quarterly by DESNZ. The pattern: deployment intensity clusters around 23-28% for solar-inclusive projects; pure solar bids without complementary measures rarely succeed against bids combining solar with the higher-carbon-saving measure that needs the renewable electricity.

How solar fits a strong IETF bid

Solar PV alone usually does not win IETF funding. The carbon savings per £ are lower than process measures (electrification, heat recovery, compressed-air retrofit). The strong bid pattern combines solar with these higher-impact measures:

Heat pump replacement of gas process heat + behind-the-meter solar. The heat pump is the primary carbon reduction (gas-to-electricity); solar provides the renewable electricity supply, reducing the residual grid carbon factor.
Electric boiler / steam system replacement + rooftop solar. Common in dairy, food processing, chemicals. Solar offsets daytime electric heat demand.
Compressed-air system replacement + solar. Compressors are typically the largest single electrical load in manufacturing; replacing with high-efficiency variable-speed plant paired with PV scores well.
Process electrification (furnace, drier, oven conversions) + ground-mount solar carport. Land-extensive bids where the host site has spare land for solar carport or ground-mount.
Battery storage paired with high-curtailment connection + solar. Where DNO export constraints make pure-export solar uneconomic, behind-the-meter solar with battery time-shift can pencil out under IETF.

Application process — full timeline

Stage 1 — Expression of Interest (EOI). Submitted via the IETF portal at gov.uk. Approximately 4-6 weeks to assemble. Includes project summary, expected carbon savings (tCO2/yr), expected capex, project type, sector code.
EOI assessment. 6-10 weeks. DESNZ confirms eligibility and invites strong EOIs to Stage 2.
Stage 2 — Full application. Approximately 12 weeks to assemble. Includes detailed business case, technical design, procurement plan, financial model, risk register, monitoring & verification plan, state aid declaration.
Stage 2 assessment. 12-20 weeks. Independent technical and commercial reviewers; DESNZ programme office final sign-off.
Award letter and Grant Funding Agreement (GFA). Award is conditional on contract signature within 8 weeks of letter.
Project delivery. 2-3 year window typical. Funded body manages procurement to GFA terms.
Milestone payments. Grant paid against verified delivery milestones — typically design completion, equipment delivery, commissioning, 6-month performance data, 12-month performance data.
Post-completion verification. 12-24 months of meter data submitted to DESNZ confirming actual carbon savings against the application baseline.

What we deliver on IETF projects

Pre-EOI feasibility — half-hourly meter data analysis, indicative system size and integration concept, expected carbon savings, IETF eligibility check. 10 working days.
Stage 2 technical pack — full PVSyst yield model, single line diagram, structural calculations, DNO pre-application engagement evidence, bill of materials, monitoring & verification plan template, schedule of works. We embed the solar PV scope into the wider decarbonisation bid prepared by your retained energy/sustainability consultant.
Procurement support — Crown Commercial Service framework positioning where applicable. Direct award route via RM6258 (Heat Networks and Decarbonisation) where you are an in-scope buyer.
Delivery — fixed-price installation against the GFA capex line. Milestone evidence packs at each payment trigger.
Verification — 24 months of monthly generation and consumption data, reconciled against PVSyst yield baseline and submitted to DESNZ on the funded body's behalf.

Authoritative references

IETF grant FAQs for commercial solar

What is the Industrial Energy Transformation Fund (IETF)?

IETF is a DESNZ-administered grant programme that funds energy efficiency and decarbonisation in UK energy-intensive industry. It supports two streams: (1) Studies (feasibility and engineering studies up to £14m total fund) and (2) Deployment (capex grants typically 15-30% of project cost). Phase 1 ran 2020-2022, Phase 2 was 2023, Phase 3 is the current active phase (split across multiple sub-windows 2024-2027) with around £500m total budget. The fund is the principal route for private-sector heavy industry to access decarbonisation capital — it complements Salix Finance (public sector) and the SEG tariff.

Which industries qualify for IETF?

IETF targets "energy-intensive industries" defined by Standard Industrial Classification (SIC) codes. Eligible sectors include manufacturing of food and beverages (SIC 10-11), textiles (13), paper and paperboard (17), chemicals (20), pharmaceuticals (21), rubber and plastic products (22), non-metallic mineral products (23 — cement, glass, ceramics), basic metals (24), fabricated metal products (25), and computer/electronic/optical products (26). The site must also typically demonstrate that energy costs are a material share of operating costs. Logistics, retail, hospitality, and most office-based businesses do NOT qualify.

How much does IETF award and at what intensity?

Project awards have ranged from approximately £100,000 to over £30 million. The grant intensity (percentage of project cost funded) varies by project type and company size: deployment projects 15-30% of eligible capex typical; studies up to 50% of study costs. Solar PV combined with process electrification or heat recovery typically lands at the 25-30% deployment intensity. Larger projects (£10m+) may have lower intensity due to state aid rules. The grant is paid in tranches against verified delivery milestones.

How does solar PV fit into an IETF bid?

Solar PV alone usually does not make a strong IETF bid — the carbon-intensity reduction per £ is lower than process electrification, heat recovery, or fuel switching. However, solar PV combined with these higher-impact measures strengthens a bid significantly. Typical strong combinations: (1) compressed air system replacement + rooftop solar to power it, (2) heat pump replacement of natural gas process heat + ground-mount solar to provide the electricity, (3) electrification of process furnaces + behind-the-meter solar to lower the grid carbon factor. The headline measure delivers the carbon savings; solar provides the renewable electricity supply.

What is the IETF application process?

IETF applications run in two stages. Stage 1: short Expression of Interest (EOI), typically 4-6 weeks to assemble. Stage 2: full application, around 12 weeks. Detailed steps: (1) check eligibility against current phase guidance at gov.uk; (2) develop a project concept with carbon savings (tCO2/yr), energy savings (MWh/yr), and project capex; (3) submit EOI via the Salix online portal (Salix administers IETF for DESNZ); (4) if invited, develop full bid including business case, technical design, procurement plan, financial plan; (5) DESNZ assessment 12-20 weeks; (6) award letter and grant funding agreement; (7) project delivery within 2-3 year window; (8) post-completion verification.

What scores well in IETF assessment?

Three primary scoring axes: (1) Carbon savings per £ grant — cheap tonnes win. (2) Technology readiness and deliverability — proven tech with credible delivery team scores higher than novel tech. (3) Strategic alignment — projects that demonstrate how the site fits the UK industrial decarbonisation pathway score higher. Practically: well-prepared bids with detailed engineering, named installer with verifiable capacity, demonstrated procurement compliance, and credible monitoring & verification plan have materially higher success rates than concept-stage bids.

Can IETF be combined with other funding?

Yes, with care. IETF can typically be stacked with: 100% AIA tax relief (Annual Investment Allowance), the Smart Export Guarantee (SEG) for any solar export, Network Innovation Allowance (NIA) for grid-interactive projects, and asset finance for the post-grant capex residual. Stacking limits exist around state aid — a project cannot exceed the General Block Exemption Regulation (GBER) thresholds for total public support. Stacking IETF with Climate Change Agreement (CCA) tax discounts is usually permitted. The bid must clearly disclose all stacked funding and demonstrate that no measure is double-funded.

How does IETF differ from Salix Finance?

Salix funds the public sector — schools, NHS, councils, universities, emergency services. IETF funds the private sector — energy-intensive manufacturing, food & drink, chemicals, paper, ceramics. The two cannot overlap. A school cannot apply to IETF; a private factory cannot apply to Salix. Both schemes are administered (operationally) by Salix Finance Ltd on behalf of DESNZ, so the application portal and processes look similar, but the eligibility criteria and scoring weights differ. See our /salix-finance/ guide for the public sector route.

Industrial Energy Transformation Fund (IETF) 2026: Solar + Decarbonisation Grants