- Industry calls for reduction in VAT and/or inclusion in grants for domestic energy storage products
- Market for domestic battery storage significantly shrunk over the past year since VAT rise to 20% for many applications
- Domestic energy storage is a crucial technology to enable a wider smart, low-carbon home ecosystem
The Association for Renewable Energy and Clean Technology (REA) and a coalition of industry groups are today urging Government to create a level playing field for home energy storage in recognition of the technologies’ benefits to the energy system and role in reducing carbon emissions.
In an open letter to Government, the home energy storage industry calls for the Government to reverse the rise in VAT on home energy storage that was implemented in October 2019 to comply with an EU ruling, now that the UK can set its own rules on VAT, and in light of the economic pressures due to the pandemic. While there have been promising announcements and other technologies have rightly benefitted from grant schemes, there has so far been no dedicated support for energy storage devices despite the sector being hard hit as well. There has been a shock to emerging, green technology as a result of the dual pressures placed on the industry by the rise in VAT, and the pandemic.
A thriving storage industry could enable the delivery of up to 86,000 energy sector jobs in the energy transition (REA REView publication 2020) and boost UK manufacturing.
The letter is signed by over 30 companies and organisations across the energy industry having been developed by a working group chaired by UK smart energy and storage company, Powervault, alongside other industry leaders such as Moixa and Good Energy. The asks are supported by major companies such as EDF, Nissan and Lightsource Labs.
The Coalition’s two key asks are:
1. For VAT rates on home energy storage to be lowered to 5%, in line with domestically used electricity & heating from fossil fuels (for example, coal burned in the home).
2. For a temporary incentive, developed in consultation with industry and to appropriate standards, to encourage householders to install home energy storage, such as inclusion in the Green Homes Grant or a scheme equivalent to grants available for EV ownership, or EV charging equipment.
Dr Nina Skorupska CBE, Chief Executive of the Association for Renewable Energy and Clean Technology (REA) said:
“Domestic energy storage is a key enabler for solar, heat pumps and EV charging in a smart home eco-system yet there remain challenges to deploying it at scale, including that such projects are not eligible for a reduced VAT rate, unlike other technologies, such as fossil fuel heating.
“Energy storage has so far not received any support from a dedicated Government incentive scheme, despite being acknowledged as a crucial building block for the energy transition and the UK achieving net zero.
We believe energy storage should be included in the Government’s national package of stimuli measures, along with renewable energy technologies of all kinds.”
Joe Warren, CEO at Powervault, said:
“Home energy storage is a key part of our journey to net zero as we need to store renewable energy to power and heat our homes and fuel the increasing number of electric vehicles. Locating energy storage in the home also supports the network and is a key enabler for the roll out of more solar PV and electric vehicles. It doesn’t make sense that VAT rates for coal and gas supplies, when used in private homes, are 5% while energy storage has a VAT rate of 20%. It’s imperative that home energy storage can operate in a level playing field – rates of 20% make this more difficult.
“Secondly, until the roll-out of smart meters and half hourly settlement when home electricity prices reflect the disconnect between when the wind blows and the sun shines and actual electricity demand, home owners with domestic energy storage will not be properly rewarded for storing “cheap” low carbon electricity and reducing their use of “expensive” high carbon electricity at times of peak demand, so temporary support is needed until this situation changes.”
Read the REA and coalition’s letter to Government here: Joint letter – Fair Treatment for Home Energy Storage
For more information or to request an interview, please contact:
Jack Abbott, PR and Communications Manager: 07590 627739 / [email protected]
Notes to editors
This letter calls for energy storage technologies to be included in the Green Homes Grant, recently extended by 12 months, or another dedicated support scheme.
For more on the Green Homes Grant see here: https://www.gov.uk/guidance/apply-for-the-green-homes-grant-scheme
It also calls for a reduction in the rate of VAT that domestic energy storage products currently pay, bringing it into line with that for coal burned in the home for example, which is still at 5%.
See here: https://www.gov.uk/guidance/vat-on-fuel-and-power-notice-70119#electricity
We would also support a wider VAT reduction for all home installations of Energy Savings Materials, including renewable energy technologies in the home, to bring them in line with VAT rates on fossil fuel.
IHS Markit provide insight on the home energy storage market. Please contact Michael Longson at [email protected] for more information.
The coalition believes any such support such encompass the range of energy storage technologies such as lithium ion batteries, and including electrically charged heat batteries.
For more on the technologies see here: https://www.r-e-a.net/wp-content/uploads/2019/10/Energy-Storage-FINAL6.pdf
Jobs figures from REA’s REVIew 2020: https://www.r-e-a.net/resources/review-2020/
List of companies & organisations signing:
REA, AceOn Group, Active Building Centre, Aquatera, BEAMA, Caplor Energy, Charlie Trousdell Associates, Community Energy England, Community Energy Scotland, Eaton, Electrical Contractors Association (ECA), Ecotricity, EDF, Electricity Storage Network (ESN), European Marine Energy Centre, Fischer Future Heat, Good Business, Good Energy, Green Power Sys, JBM Solar, Lightsource Labs, Moixa, National Grid ESO, Nissan Motors GB, Powervault, REAL, Regen, Romatech, Schneider Electric, SMS Plc, So Energy, Social Energy Group, Solar Trade Association (STA), Solarcentury, Sunamp, Tepeo, Wattstor.
About the Association for Renewable Energy and Clean Technology (REA):
The Association for Renewable Energy and Clean Technology (known as the REA) is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, power and the Circular Economy. The REA is a not-for-profit organisation representing fourteen sectors, ranging from biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders.
For more information, visit: www.r-e-a.net