UK Government announce scrappage of VAT on Battery Storage. Is now the time to buy?

UK Government announce scrappage of VAT on Battery Storage. Is now the time to buy?The UK government has exempted retrofitted battery energy storage systems (BESS) from its 20% VAT, from 1 February 2024.

From the Spring Statement in 2022, energy saving domestic equipment such as heat pumps and roof-mounted solar have been exempt from the VAT. BESS too were exempt, but only when installed alongside other energy-saving materials such as solar.

But yesterday (11 December) the government announced that retrofitted BESS will now also be exempt from the tax.

Members of the energy industry, including the Association for Renewable Energy & Clean Technology (REA) and Solar Energy UK have been campaigning for retrofitted BESS to also be included in the VAT exemption, something which was not mentioned in the initial Battery Strategy published on 26 November of the preceding Autumn Statement.

UK Government announce scrappage of VAT on Battery Storage. Is now the time to buy?

However, following a consultation on the expansion of the VAT relief on energy-saving materials – also announced in the 2022 Spring Statement – the government revealed:

“The government agrees with respondents, though, that this technology meets all of the stated objectives for this VAT relief in its own right, and will therefore bring electrical battery storage within the scope of the relief. This means that the technology will now also qualify for VAT relief when either retrofitted to a qualifying energy-saving materials, or installed as a standalone technology connected to the grid.”

What does this mean? This means the market now opens up to many homeowners that cannot have solar installed on their roofs or for other households that want to add battery storage without paying VAT.

Home battery

I. Introduction

• Battery storage in the UK is a topic of growing importance.
• Key role in the transition to renewable energy.

II. Benefits of Battery Storage

• Enables efficient use of renewable energy.
• Reduces reliance on fossil fuels.
• Provides grid stability and reliability.
• Facilitates peak demand management.

III. Current State of Battery Storage in the UK

• Increasing adoption of battery storage systems.
• Government initiatives and policies supporting deployment.
• Growth in utility-scale and residential installations.

IV. Regional Relevance

• UK’s commitment to reduce greenhouse gas emissions.
• Battery storage as a solution for intermittent renewables.
• Opportunities for local energy communities and microgrids.

V. Challenges and Opportunities

• Cost-effectiveness and improving battery technology.
• Integration with existing energy infrastructure.
• Regulatory frameworks and market design.

VI. Case Studies

• Successful battery storage projects in the UK.
• Lessons learned and best practices.

VII. Future Outlook

• Anticipated growth and market potential.
• Role of battery storage in achieving decarbonization goals.
• Innovation and research in battery technology.

VIII. Conclusion

• Battery storage is a crucial component for a sustainable energy future in the UK.
• Continued investment and support are needed for its widespread adoption.

How much does a home battery system cost? This varies dependent on whether it’s an add on to existing system but an example of cost would be £3,500 for a 3kW AC Coupled Inverter with 8.2kWh of Storage from 01.02.2024.

Can a home battery save money? Simple answer is yes but this is not straightforward. If added to a solar PV system then it can store any energy that would then end up going to the grid for use later or if combined with a time of use tariff such as Octopus GO and charged during the night at a cheaper rate.

Can a battery power my house in a power cut? Yes. Storing energy in a battery can allow you to power your house in the event of a power cut and you can read more here in our indepth article. Whole home battery backup is available and you can read more in our article here.