THE solar panel scheme, which allows micro-generators to receive up to €400 a year tax-free by selling surplus electricity back to the grid, is scheduled to end on December 31.
A final decision on whether to renew it is expected in the government's October’s budget.
This exemption has been widely credited with encouraging over 130,000 households to install solar panels, offering both environmental and financial relief during a period of persistently high electricity prices.
Energy commentator Daragh Cassidy has described the scheme as highly effective, saying it supported the national effort to reduce carbon emissions while also easing the pressure on household budgets.
He warned that scrapping the exemption would be a mistake, especially as solar panels still carry significant upfront costs, even with grants in place.
The €400 incentive, he said, shortens the payback period and makes the investment more attractive.
Under current rules, any income from micro-generation up to €400 annually is exempt from income tax, USC, and PRSI.
The exemption applies per named individual on an electricity bill, not per household, which means dual-income households can potentially earn up to €800 tax-free.
Officials within the Department of Finance have advised that the exemption should be maintained, citing both its low fiscal impact and its alignment with national climate commitments.
The forgone tax revenue is estimated at €7 million per year, or about €50 per micro-generator.
This tax relief incentivises people to produce renewable electricity mainly for their own houses, while also benefiting the grid with any excess energy.
This potential policy shift comes as Ireland’s energy system undergoes rapid change.
Recent analysis from the Energy Institute and KPMG shows that the country made a lot of progress in reducing emissions in 2024, including an 8.9% drop from the energy sector and a slight decline in transport emissions.
These numbers were mainly due to the closure of Ireland’s last coal-fired power station and a greater reliance on imported electricity from Britain.
However, fossil fuels still account for over 80% of the primary supply for Ireland.
Natural gas alone fuels more than 40% of electricity production.
Although solar output jumped by 70% in 2024, it still contributed only 3% of total electricity demand.
Grid capacity is straining to keep up with demand, mainly due to the expansion of data centres and the electrification of heating and transport.
Major projects, such as the Celtic Interconnector, which will allow greater electricity imports, have been delayed.
Meanwhile, the budget for emergency power generation has soared to more than €1.3 billion, far above initial projections.
Electricity costs also remain a major concern.
Irish people pay some of the highest rates in the EU, and household bills remain around 30% above the European average.
These high prices have been cited by businesses as a growing threat to investment and long-term viability in the country.
The government’s stated goal of achieving 80% renewable electricity by 2030 remains in reach, but the Sustainable Energy Authority of Ireland has warned that current efforts fall short of meeting both domestic and EU carbon targets.
In this wider context, the future of the €400 tax exemption becomes more than just a budgetary issue.
It’s seen as a signal of how committed the state is to supporting people's contributions to renewable energy.
Removing it could deter new installations and undermine public support at a time when Ireland needs to speed up its energy transition.
With energy costs still high and no new credits planned for the coming winter, many are calling on the government to maintain the exemption as a smart, low-cost way to keep momentum going.
