The cost of installing solar panels could be reduced by as much as €1,000.
The measure will form part of the Finance Bill which will come before Cabinet this week.
It is expected that the move to abolish the VAT on initial costs will reduce the average length of time it takes for households to make money back on their investment from seven years to six.
Speaking to KCLR, local Green Party Cllr said Maria Dollard said she hopes the reduction will encourage households in Carlow and Kilkenny to avail of solar panels; “Everything that will help people is really to be welcomed and to be looked into and there will be early adopters but as we go along we need to encourage more and more people to see the benefits of solar power”.