The VAT on solar panels is set to be abolished, the Environment Minister has told Newstalk’s On The Record.

Under a plan going before Cabinet next week, the 23% VAT rate will be reduced to 0% - cutting around €1,000 off the average cost of getting panels installed.

Currently the average price of installation sits at around €9,000 however, the VAT cut alongside the SEAI solar grant of up to €2,400 means the average cost of installation will fall to around €5,600.

The move will reduce the average length of time it takes for households to make money back on their investment from seven years to just over six.

Minister Eamon Ryan told Gavin Reilly the Government has set a target of delivering five extra gigawatts of power through solar in the next three years.

“We’ve set really ambitious targets,” he said. “Now, we’ve also changed the law in the last year.”

“It used to be very difficult to sell power back to the grid and we’ve changed that. That has changed.

“There will be further changes this year in terms of, particularly, allowing farmers and large businesses to be able to generate and use and sell their own power.

“To further accelerate that, we’re going to, subject to Cabinet agreeing on Tuesday, take the VAT off solar panels to bring the cost down.

“It’s still, for a lot of families, a lot of households, you look at the equation and you think, ‘oh it might take six or seven years’ – but if we can shave a year off that on the payback, it will help the expansion.”

A man installing a rooftop solar panel array. Image: Radharc Images / Alamy

Minister Ryan said around 50,000 households have already made the switch to solar in recent years – noting that, if you ask anyone in the solar installation industry, “their phones are hopping”.

“We’ve set a target in the next three years to deliver five gigawatts of solar,” he said.

“Now if that was in full capacity - it never is and the capacity factor is lower anyway - but that is roughly the size of the power demand as we speak, at the moment, in the whole country.

“It is as much renewables as we have built over the last 20 years.

“That’s what we need to do on solar alone as well as on offshore wind and onshore wind.

“These sorts of tax signals to help it happen, I think, is going to be a great help.”

Green Party TD Neasa Hourigan at the launch of a 'Roadmap to Zero' report around Hepatitis C elimination targets in June 2022. Picture by: Sam Boal / Photocall Ireland

Minister Ryan also defended the decision to suspend Neasa Hourigan form the Green Party over her decision to vote against the Government last week.

“We are in a very strong position in government,” he said.

“We are actually delivering a huge amount of what the people who voted for us want us to deliver and we have a huge amount more to deliver.

“The strength of that comes with everyone voting together.

“That gives you real strength of argument when it comes to negotiating with Fianna Fáil and Fine Gael.

“It wasn’t in any way personal or punitive or there wasn’t any personal views in it – it was purely that we need to maintain our strength so that we can deliver for the people.”

You can listen back here: