The UK government plans to offer VAT relief on energy storage battery installation to improve energy efficiency in residential homes. This progress goes beyond the previous VAT exemption plan, which only applied to batteries installed simultaneously with solar panels.
Scheduled for implementation on February 1, 2024, this new policy now encompasses standalone battery installations and retrofitted batteries. This decision is crucial for the PV industry, and further aiding the UK in transitioning to clean energy will be a beneficial step for homeowners. Additionally, it will also boost the energy storage sector.
What’s changing?
In the 2022 Spring Statement, the government broadened the VAT exemptions on energy-efficient materials (ESMs). Whilst a welcome move, these expansions did not go far enough. In response to industry calls, the government launched a Call for Evidence (CfE) to gather views on potential areas for further reform.
The assistance now includes technologies like electric battery storage, water-source heat pumps, and diverters added to Energy Saving Measures (ESMs). These ESMs can include solar panels and wind turbines.
The introduction of this policy in 2024 makes energy storage systems, crucial for green energy utilisation, significantly more financially viable. Lower VAT reduces the cost of PV systems and makes them more attractive as investments for buyers. This will lead to increased consumer engagement and accessibility to green energy generation, storage, and management.
The zero per cent VAT rate, set to commence in February 2024, is expected to stimulate the expansion of the renewable energy sector. This strategy enables creativity and capital influx into green technologies, thereby advancing developments in energy conservation and administration systems.
This approach is beneficial not only for the environment but also propels economic expansion by creating fresh job opportunities and attracting investments into the eco-friendly technology sector.
Which battery storage projects are covered?
Battery storage added alongside solar PV
Projects where energy storage is installed concurrently with a solar system. People can benefit from solar and storage by maximising their renewable investment. They can also benefit by optimising energy use. Additionally, they can benefit by storing extra energy for later. This contributes to a more resilient and sustainable energy infrastructure.
Standalone battery storage
Projects where a battery is installed without supporting solar. Residents can take advantage of smart tariffs to charge their battery inexpensively overnight when the cleanest and lowest-cost energy is available. They can then discharge the stored energy during peak hours, reducing strain on the grid, minimising fossil fuel use, and saving on energy bills.
Retrofit batteries
Projects where a battery is added to an existing solar array. By retrofitting a storage battery, billpayers can save solar energy for use throughout the day, leading to significant energy bill savings, carbon reductions, and better control over energy usage. This, in turn, contributes to a cleaner and more manageable grid.
To Summarise
UK Government’s announcement of VAT relief on energy storage batteries, effective from February 2024, signifies a groundbreaking moment for UK homeowners. This forward-thinking policy expands beyond previous limitations, covering standalone battery installations and retrofitted batteries.
The reduced VAT not only makes energy storage systems more financially viable but also fosters a surge in consumer engagement and accessibility to green energy.
Whether adding storage alongside solar PV, opting for standalone battery solutions, or retrofitting existing solar arrays, homeowners now have the opportunity to contribute to a cleaner and more sustainable energy future while enjoying significant financial benefits.
