Removing VAT on battery storage significant for energy reduction targets 

Removing VAT on battery storage significant for energy reduction targets 

To help reduce the UK’s energy consumption, the Government has taken a significant step by cutting to 0%, the VAT levied on battery storage solutions, installed from February 1st, 2024. Although not strictly a low carbon technology, batteries are a critical to optimising any solar PV installation.  

Following the temporary VAT relief applied in the Spring budget to energy-saving materials (ESM), which applies to the installation of solar panels, heat pumps and insulation, this practical removal of VAT on battery storage solutions is welcome, if obvious step by the government. 

From March 2023, installing solar panels, battery storage, heat pump or insulation attracted no VAT, which was expected to save the average household around £1,000 off the installation. However, it’s battery storage could not be added later, as a standalone installation, without attracting the VAT cost. 

The Government allowed a VAT zero rate until March 2027 on battery storage fitted as part of a comprehensive installation using qualifying ESM material. However, it did not add battery storage to the list of qualifying materials, so it will remain standard rated when installed separately. 

Decision important for energy consumption reduction 

The announcement that battery storage solutions, either retrofitted or included as part of a comprehensive solar PV installation, will be zero rated for VAT from February 1st, 2024, is an important step in the Government’s drive to Net Zero. 

Following an enquiry into how technological development could deliver more clean energy from solar installations, the EAC called for VAT to be removed on battery storage solutions, either retrofitted or supplied as part of a comprehensive rooftop solar PV array. 

It appears these efforts by Energy Security and Net Zero Secretary, Grant Shapps MP and Chairman of the Environmental Audit Committee (EAC), Philip Dunne MP, have persuaded the Chancellor to make this very practical decision.  

The rising cost of energy in the UK is increasing demand for alternative energy sources or ways homeowners can cut their energy consumption. Heat pumps remain a difficult sell and a technology not really understood by the average householder, but solar PV and batteries make sense to many. 

This is a great opportunity for homeowners, or even responsible landlords to grasp the nettle and embrace the technology. We started seeing solar panels on rooftops during the eighties and they started to become more mainstream three decades ago, but batteries are the game-changer. 

Benefits of batteries make the decision obvious 

The decision to zero rate for VAT, battery storage solutions as part of a solar PV array or fitted as a standalone product makes sense and makes the Government’s decision an obvious one. This is particularly true when the decision is announced as we enter the shorter, cloudier days of winter. 

As a business dedicated to the installation of battery storage solutions, the team here at Sunergy Renewable naturally see this as great common sense on the part of the Chancellor and welcome the VAT change unreservedly – an incentive to fit batteries would be the ideal next step.  

Without solar battery storage, homeowners are reliant on energy produced only during the day, when many will not be at home and consumption is naturally already low. Whilst many early adopters may have been attracted by feed-in tariffs and supplying the grid for extra income, the focus for most now, is buying less energy from the providers. 

There is a huge number of homeowners who quickly recognised the benefits of solar power when the technology became mainstream and now they have the opportunity to add the all-important battery storage solution [and new solar inverter] that will make their solar PV array complete. 

Battery storage allows the solar panels to generate energy during the daylight hours and make it available for use by the householder when it is needed most, at night, for lights, cookers, television, car-charging and hundreds of other electrical-based activities we take for granted in the home. 

And of course, the correctly specified battery storage solution can be used to store energy from the National Grid. This is a particularly useful option if your energy provider offers cheap nighttime tariffs, which typically reduce to less than half the usual cost per kWh, for 4 or more hours per night. 

Zero VAT on battery storage installation 

This announcement should be the start of a rush to install battery storage for homeowners, house builders and landlords, which of course will bring its own set of problems.  

Firstly, how long before the Government changes its mind and slaps VAT back on elements of the system? Also, will there be enough batteries and will there be enough qualified specialist to specify and install appropriate systems?  

Here at Sunergy Renewables we have the expertise to specify, install and maintain solar PV. We also have the supply chain with the world’s leading storage battery manufacturers to deliver the solution you need to reduce energy consumption and save thousands over time. 

If you are interested in retro-fitting a battery storage solution to get the most out of your existing solar PV array, or you’re interested in a comprehensive solar panel and battery storage installation, be sure to beat the rush and get in touch today. You know it makes sense. 

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Home Battery Storage Now VAT FREE

Following the governments review into energy saving materials, they have now confirmed that the current 20% VAT on retro-fit or standalone battery storage will no longer be subject to VAT from February 2024. This is huge industry news and a change all of us will welcome, if you are or have been considering battery storage, now is the time to act ahead of install for February 2024, fill out the form below to enquire with us and one of our team members will respond as soon as possible.