Government told to cut VAT on home energy storage

The government has been urged to create a level playing field for home energy storage and recognise its benefits to the energy system, as well as its role in reducing carbon emissions.

On 21 December, the Association for Renewable Energy and Clean Technology (REA), together with a coalition of industry groups, wrote to the government, setting out how a thriving storage industry can deliver up to 86,000 energy sector jobs and boost UK manufacturing. However, despite promising announcements and other technologies benefitting from grant schemes, energy storage devices have gone without dedicated support.

Considering the rise in VAT on home energy storage was implemented in October 2019 to comply with an EU ruling – and with the UK now able to set its own rules on VAT – the coalition called for it to be reversed in light of the economic pressures of the pandemic.

Two key asks were listed for government: lowering VAT rates on home energy storage to 5%, in line with domestically used electricity and heating from fossil fuels, and for a temporary incentive, developed in a consultation with industry and to appropriate standards, to encourage householders to install home energy storage. This could be through inclusion in the Green Homes Grant or a scheme equivalent to the grants that are available for electric vehicle (EV) ownership, or EV charging equipment.