No VAT charges on battery energy storage systems!

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The UK government’s decision to remove the VAT charge for domestic battery energy storage systems (BESS) from 1 February 2024 marks a significant milestone in advancing the country’s transition to green energy solutions. This policy shift follows extensive advocacy efforts by Solar Energy UK and other stakeholders to ensure retrofitted BESS installations also benefit from tax relief, similar to energy-saving technologies like heat pumps and solar panels.

By eliminating the 20% VAT for all domestic BESS installations, the government aims to make energy storage more accessible and cost-effective for households. The measure will remain in effect until at least 31 March 2027, extending benefits to technologies such as water-source heat pumps and smart diverters, which optimise solar power use.

This move is expected to further incentivise more than 1.2 million solar-powered homes to adopt battery systems, enhancing their ability to store excess energy, use solar power

beyond daylight hours, and maximise savings on energy bills. The integration of BESS can also contribute to reducing grid stress by participating in programs that reward consumers for reducing energy consumption during peak demand periods.

The growth in domestic BESS installations aligns with the increasing deployment of larger-scale projects across the UK. Notable recent developments include Ridge Clean Energy’s 50MW Fair Oaks Renewable Energy Park in Nottinghamshire and Zenobē’s 50MW/100MWh BESS in North Lanarkshire. Projects such as these exemplify the potential for combining solar power with large-scale energy storage, reinforcing the nation’s commitment to sustainable energy infrastructure.

Chris Hewett, CEO of Solar Energy UK, underscored the transformative potential of this tax change, noting that it could significantly boost demand for home battery storage and amplify the benefits of home solar systems. With demand expected to rise, this move positions the UK as a leader in driving the adoption of energy storage solutions, supporting its broader climate and sustainability targets.