UK Government announces tax relief for battery storage systems

In a significant move to promote energy efficiency and reduce reliance on fossil fuels, the UK government has announced a VAT exemption on the installation of battery energy storage systems (BESS). This policy, set to take effect from February 1, 2024, will significantly lower the cost of BESS, making them more accessible to homeowners and businesses alike..

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Battery storage plays a crucial role in the transition towards a low-carbon energy future. It enables households and businesses to store excess solar or wind energy generated during off-peak hours, allowing them to consume it during peak periods when energy prices are higher. This not only reduces reliance on the grid but also optimises energy consumption and saves money on electricity bills.

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The VAT exemption will significantly reduce the overall cost of BESS installation’s, making them even more affordable for homeowners and businesses. This is particularly important for retrofitted installations, where the VAT exemption will eliminate the additional upfront cost associated with the purchase and installation of the battery.

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By making BESS more accessible, the VAT exemption will encourage wider adoption of battery storage technology. This, in turn, will lead to increased energy self-sufficiency, reduced peak demand on the grid, and overall lower energy consumption. As a result, the environment will benefit from a reduction in greenhouse gas emissions.

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Financial Benefits of Battery StorageThe economic benefits of battery storage are substantial. Homeowners can save up to 40% on their electricity bills by storing solar energy during the day and consuming it at night. Businesses can also enjoy significant savings by optimising their energy usage and reducing reliance on the grid.

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The VAT exemption on BESS is a welcome step towards a more sustainable energy future. It is essential that the government continues to support the development and deployment of BESS technology. This includes providing additional incentives, such as feed-in tariffs and smart grid integration programs, to further accelerate the adoption of this critical technology.

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As the UK transitions towards a net-zero energy economy, battery storage will play an increasingly important role. The VAT exemption is a positive step in this direction, and it is hoped that it will pave the way for a widespread adoption of BESS technology, leading to a cleaner, more resilient, and more affordable energy system for all.

The full report can be found https://www.gov.uk/government/consultations/vat-energy-saving-materials-relief-improving-energy-efficiency-and-reducing-carbon-emissions/outcome/summary-of-responses