Clean Energy Grants and R&D Tax Credits: A Complete Guide for UK Businesses
Meeting the UK’s net zero targets by 2050 is one of the greatest challenges for businesses today. From installing renewable technologies to trialling innovative green solutions, the shift toward sustainability comes with a high price tag. Fortunately, companies can access government funding and tax incentives to ease the financial burden. Two of the most powerful tools available are clean energy grants and R&D tax credits.
In this guide, we’ll look at the top clean energy grants available, how R&D tax relief supports innovation, and how businesses can combine the two for maximum benefit.
Why Clean Energy Funding Matters for UK Businesses
Energy efficiency and renewable technology adoption aren’t just about meeting compliance requirements. They also provide real commercial benefits:
- Reduced operational costs through lower energy bills.
- Improved brand reputation as customers prefer sustainable companies.
- Access to financial incentives that reward green innovation.
- New market opportunities in low carbon products and services.
With climate policies tightening, businesses that act now will be better prepared for the future. Government-backed clean energy grants and R&D tax credits make this shift more achievable.
What Are Clean Energy Grants?
Clean energy grants are financial awards designed to help UK businesses improve sustainability and reduce carbon emissions. They can cover the costs of installing renewable energy technology or adopting greener processes.
Technologies supported often include:
- Electric vehicle (EV) chargepoints
- Solar panels and energy storage
- Green heat systems
- Ice-powered or low-carbon cooling systems
These grants aren’t just about reducing emissions. They also encourage local job creation, manufacturing, and community investment — proving sustainability and economic growth can work together.
Examples of Funded Clean Energy Projects
UK clean energy funding has already supported projects such as:
- Community-owned wind farms supplying local power
- Large-scale infrastructure upgrades to improve energy efficiency
- Green heat networks that reduce reliance on fossil fuels
Such projects show how government funding helps drive both environmental and financial impact.
Top UK Clean Energy Grants for 2025
There are several key funding schemes available to UK businesses:
| Grant | Who It’s For | What It Supports |
|---|---|---|
| Industrial Energy Transformation Fund (IETF) | Businesses in England, Wales, NI | Energy efficiency projects and low carbon tech |
| Smart Export Guarantee | Businesses generating renewable power | Payments for surplus energy fed back to the grid |
| Green Gas Support Scheme | Companies investing in biomethane | Expanding green gas production for the national grid |
| Net Zero Innovation Portfolio (NZIP) | Innovators in clean technology | Funding for new low carbon systems |
| Innovate UK Smart Grants | Businesses developing clean energy projects | Financial support for feasibility and development |
These funding opportunities allow UK businesses to make meaningful progress toward net zero while staying financially secure.
What Are R&D Tax Credits?
Alongside grants, UK businesses can benefit from R&D tax credits, a government incentive designed to reward innovation in science and technology.
If your company develops a new product, improves a process, or solves a technological challenge, you may be able to recover up to 33% of eligible costs through R&D tax relief.
For many businesses working on green technology, this is a vital way to reduce financial risk.
Learn more: R&D tax relief
R&D Tax Credit Eligibility for Green Innovation
To qualify, projects must meet HMRC’s definition of research and development: they must aim to overcome a scientific or technological uncertainty that couldn’t easily be solved by someone in the field.
Eligible projects might include:
- Developing a more efficient solar panel system
- Improving energy storage batteries
- Creating software that optimises renewable power distribution
- Designing sustainable building materials
Eligible costs can include:
- Staff wages, NIC, and pension contributions
- Software used in R&D projects
- Materials and consumables
- Prototyping costs
For a detailed guide, see: R&D tax credits
Real-World Example
A UK manufacturing firm working on a new energy storage solution could:
- Secure an Innovate UK Smart Grant to cover feasibility research
- Claim R&D tax credits on staff costs and prototype development
- Offset the majority of their project costs, making innovation financially viable
Combining Clean Energy Grants with R&D Tax Credits
The most effective funding strategy is to use grants and tax credits together. However, you can’t “double dip” meaning the same expense can’t be covered by both.
Key Tips:
- Plan early: Map out which project costs can be grant-funded and which can go into your R&D tax relief claim.
- Separate budgets: Allocate grant funding for large capital expenses (like equipment) and use tax credits for staff time and development costs.
- Keep clear records: HMRC requires evidence of expenditure and project details. Proper documentation avoids claim rejections.
By aligning the two, businesses can maximise support while avoiding compliance issues.
FAQs: Clean Energy Grants and R&D Tax Credits
Can my business claim both clean energy grants and R&D tax credits? Yes — but the same cost cannot be claimed twice. Smart planning ensures both funding sources work together.
Do SMEs and large companies qualify differently? Yes. SMEs can claim a higher rate of R&D relief, while large companies usually apply under the RDEC scheme.
What types of clean energy projects usually qualify? Projects that involve innovation — such as renewable power generation, smart grid technology, or carbon reduction systems — are often eligible.
How soon can I claim R&D tax relief after receiving a grant? You can claim after your accounting period ends, as long as you clearly separate grant-funded and tax relief-eligible costs.
How to Apply for R&D Tax Relief
The process involves:
- Preparing a claim notification to HMRC.
- Documenting your project’s technological advances.
- Identifying all eligible costs.
- Submitting your claim as part of your company tax return.
For the latest guidance, refer to HMRC.
Start Your R&D Tax Relief Claim Today
Combining clean energy grants with R&D tax credits is one of the smartest ways for UK businesses to fund innovation, cut costs, and contribute to a greener future.
Want to maximise your claim? Book a free consultation today and find out how much you could recover.
