Opinion

REA & industry leaders call for domestic energy storage VAT cut 

REA and industry groups urge Government to create a level playing field for home energy storage

Energy storage concept

In an open letter, the Association for Renewable Energy and Clean Technology (REA) and a coalition of industry groups have urged the Government to create a level playing field for home energy storage, in recognition of the technologies’ benefits in reducing carbon emissions.

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 by the pandemic.

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.

The VAT rate rise of 5% was implemented in October 2019 to comply with an EU ruling but, following Brexit, we are free to set our own rules on VAT. The REA, plus over 30 organisations, including Powervault, Moixa and Good Energy, feel that the levy is harming a nascent industry, which they believe, could book UK manufacturing and enable the delivery of up to 86,000 energy sector jobs in the energy transition (REA REView publication 2020).

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.”