Solar Thermal vs Solar PV in Ireland

For most Irish homes, solar PV is the better buy. It attracts a bigger SEAI grant (up to €1,800 against a flat €1,200), the electricity it makes can run anything in the house rather than just the hot water cylinder, and anything you do not use can be sold back to the grid. Solar thermal still wins in one specific situation: a household that gets through a lot of hot water and has no plans for a heat pump. There is also a VAT wrinkle that almost nobody mentions, and it does not fall in solar thermal's favour.

The Actual Difference

They look similar on a roof and the names get used interchangeably in conversation, but they are unrelated technologies.

Solar PV (photovoltaic) panels convert daylight into electricity. That electricity runs whatever is switched on at the time, whether that is the kettle, the immersion, an EV charger or the washing machine. What you do not use is exported to the grid, and your supplier pays you for it.

Solar thermal panels, sometimes called solar water heating or solar collectors, contain a fluid that is warmed by the sun and pumped through a coil in your hot water cylinder. They heat water and they do nothing else. No electricity, no export, no running the dishwasher.

That single distinction drives almost every other difference between them.

The Grants Compared

Both sit under SEAI's individual energy upgrade grants, but they are structured differently.

On the PV side that works out at €1,400 for a 2kWp system, €1,600 for 3kWp and €1,800 for 4kWp. Our SEAI solar grant guide breaks the tiers down further, and the worked tier examples show how the pro-rata maths lands on odd system sizes.

The VAT Rule That Only Names One of Them

This is the part that rarely gets written about, and it can be worth more than the difference between the two grants.

Since 1 May 2023, Revenue applies the zero rate of VAT to the supply and installation of solar panels on private dwellings, provided the panels and the installation come from the same business under a single supply-and-install contract. Revenue's own tax and duty manual then defines what counts: "Solar panels include photovoltaic panels, solar windows, and solar walls."

Solar thermal collectors are not named in that definition.

So the position is not symmetrical. A solar PV installation on an Irish home is squarely inside the zero-rate wording. A solar thermal installation is not obviously inside it, and where the zero rate does not apply, a supply-and-install contract would ordinarily fall to the reduced rate instead, subject to Revenue's two-thirds rule. On a €4,000 job that difference is real money.

One more thing in PV's favour here: Revenue's zero rate also covers ancillary equipment supplied and installed under the same contract as the panels, and that explicitly includes batteries, wiring and the controller. So a PV-plus-battery job can carry the zero rate across the whole package. See our guide to stacking the grant with 0% VAT for how that reads on a real quote.

Which One Suits Your House

Strip away the technology and it comes down to what your house actually spends energy on.

Solar thermal makes sense if you have a large household getting through a lot of hot water every day, you have a compatible cylinder or are replacing one anyway, you have unshaded south-facing roof space, and you are not planning a heat pump. Its efficiency at the one job it does is genuinely high.

Solar PV makes sense if you want flexibility, you are at home during daylight hours, you have an EV or plan to get one, you want to be paid for what you do not use, or you might fit a battery later. It is the right answer for the large majority of Irish homes, which is why it is the bigger grant.

If you are getting a heat pump, think hard before adding solar thermal. A heat pump already heats domestic hot water efficiently, so the two overlap and solar thermal's case weakens considerably. The heat pump grant guide covers how that stack works, and pairing a heat pump with PV is usually the stronger combination.

The Option That Makes This Less of a Choice

There is a third route that often gets missed: fit solar PV, then add a power diverter. A diverter watches for surplus electricity your panels are producing but the house is not using, and sends it to the immersion element in your hot water cylinder instead of exporting it.

The effect is that a PV system starts doing the job of a solar thermal system, using electricity you would otherwise have sold cheaply. It will not match a dedicated thermal collector for raw hot-water efficiency, but it comes from a system that also runs everything else in the house and earns export income when the cylinder is up to temperature. For a lot of homeowners weighing thermal against PV, this is the answer to both.

Can You Fit Both?

They are separate grants for separate measures, so they are not mutually exclusive in principle. In practice, roof space is finite and the two compete for the same south-facing area, and if you have committed the good roof to thermal collectors you have less of it for PV.

If you are considering both, confirm the position directly with SEAI before you apply, because grant conditions attach per measure and per property. It is also worth checking planning limits on total panel area if any of it is going in the garden rather than on the roof, which our ground-mounted solar guide covers, and note that PV and solar thermal count together toward that limit.

Frequently Asked Questions

Is solar thermal or solar PV better in Ireland?

Solar PV is the better choice for most Irish homes. It carries a larger SEAI grant of up to €1,800 against solar thermal's flat €1,200, the electricity it produces can power anything in the house rather than just hot water, and surplus can be exported for payment under the Clean Export Guarantee. Solar thermal is the stronger option only for households with high daily hot water demand and no plans for a heat pump.

How much is the SEAI solar thermal grant?

The SEAI solar water heating grant is a flat €1,200. Unlike the solar PV grant, it does not vary by system size or property type, so a detached house, a semi and an apartment all receive the same amount.

Do solar thermal panels qualify for 0% VAT in Ireland?

Not clearly. Revenue's zero rate covers the supply and installation of solar panels on private dwellings, and Revenue's tax and duty manual defines solar panels as including photovoltaic panels, solar windows and solar walls. Solar thermal collectors are not named in that definition. Ask your installer to confirm and state the VAT rate on the written quote before you sign.

Can I get both the solar PV and solar water heating grants?

They are separate SEAI grants for separate measures, so claiming both is not ruled out in principle. Roof space is the practical constraint, since both want the same south-facing area. Confirm your specific case with SEAI before applying.

Does solar thermal need a post-works BER?

Yes. SEAI requires a post-works BER assessment before it releases payment on the solar water heating grant. The same applies to the solar PV grant. Budget for the assessment and arrange it promptly after installation, because the grant is not paid until the BER is published.

What year must my home have been built to qualify?

For both grants, the home must have been built and occupied before 2021 and must have an MPRN. Homes first occupied in 2021 or later are not eligible for either.

Can a solar PV system heat my hot water?

Yes, with a power diverter. The diverter sends surplus PV electricity to your immersion element rather than exporting it, so the system heats water as well as running the rest of the house. It is a common way to get much of the benefit of solar thermal from a PV installation.

Grant amounts and eligibility conditions checked against SEAI's published solar electricity and solar water heating grant pages on 22 July 2026. VAT treatment checked against Revenue's zero-rate guidance and its tax and duty manual on the supply and installation of solar panels. Grant rates and tax rules change, so confirm current figures with SEAI and Revenue before committing.