The VAT cut on home battery storage and what it means for you!
The government recently announced that standalone battery installations will be zero-rated for VAT. This is BIG NEWS that we at Glowb have been waiting for all year. But why is this so important? And what does this mean for homeowners?
Solar installations are already zero-rated for VAT – and if a battery is installed as part of a solar installation then it is, too. However, until now if you installed a battery without solar, you had to pay 20% VAT. This anomaly has now been fixed – and it’s going to make a big difference.
Domestic batteries have been around for a few years. But until recently, they’ve only been useful installed as part of a home solar installation. Put simply, the excess electricity produced during the day by your solar panels is stored in the battery, and then can be used in the evening when the sun goes down. The price you get paid for exporting power is much lower than the price you pay for buying power from the grid – so this reduces your energy bills. Great if you have solar – but not much use if you don’t.
2023 saw the electricity market change. There are now new tariffs on the market where the price of electricity varies during the day (typically much cheaper at night than in the evening peak). This means that if you have a domestic battery, you can charge this at night when power is cheap, and avoid buying “full price” electricity during the day. This means your battery could save you money regardless of whether you have solar panels or not.
So, for the first time, it can make sense to install domestic batteries without solar. This means that millions of homeowners whose roofs are not suitable for solar can now think about joining the clean home energy revolution, too.
And, even more changes are coming in 2024 which make domestic batteries even more compelling. New technology is coming in which will allow home batteries to react to grid price changes in real time. This should create more opportunities to charge and discharge batteries during the day – generating even more savings!
Charging and discharging batteries doesn’t just save money for consumers – domesitc batteries provide a really valuable service to the grid, and are ultimately contributing to ‘greening’ our national power supply. Any technology that can smooth out electricity demand over the day, contributing to reducing the total amount of generation capacity the country needs, allows us to have a greater proportion of renewables on the grid, and phase out fossil fuel power (like gas peaking power plants) faster. So – even if you aren’t directly generating clean power at home, you’re still making a difference to greening the grid.
This new announcement on zero-rated VAT for standalone battery installations means batteries will be 20% cheaper than they are now – and so this is a choice that will make sense for even more people in 2024. At Glowb, we predict that 2024 will be the year of the battery!
Things to watch out for:
- You need somewhere suitable to put your battery (garage, utility room, shady outdoor wall, etc)
- If you already have a solar system with a feed-in-tariff, be careful – you may not be able to add a battery and keep your feed-in-tariff payments
- Your battery needs to be installed by a qualified electrician with experience in domestic battery installations
- Forecasting savings accurately is difficult because it depends so much on future energy prices – and no one has a crystal ball (check out this article we wrote on how to be cautious here
- Having a battery-only installation is only appropriate for homeowners