Households installing solar panels are to save an extra €1,000 as the VAT on initial costs is to be completely abolished.
In a bid to encourage more people to opt for renewable energy, Green Party leader Eamon Ryan is slashing VAT to 0 per cent on the supply and installation of solar panels on homes and public buildings.
The move, due to be signed off on by the Government this week, will mean a saving of approximately €1,000, bringing the average €9,000 cost for installation 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 fall to about €5,600.
Mr Ryan said the VAT change will give people cheaper renewable energy and reduce their payback period by nearly a year, from seven years to 6.2 years, based on an average 4.5KW installation for homes.
He said: “This welcome Government move is yet 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.”
The Government also plans to put solar panels on all schools by 2025, starting this summer.
Mr Ryan said: “We have set a target to reach 5GW of solar energy by 2025, increasing this to 8GW by 2030.
"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.”
The VAT change in Ireland will be introduced in the Spring Finance Bill following a recent amendment to the EC VAT Directive.
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.