Advocates for solar electricity are celebrating a triumph in their efforts to eliminate VAT charges on household batteries retrofitted to homes already equipped with PV panels.
This success in the tax battle aligns with the confirmation from the MCS (Microgeneration Certification Scheme) that 2023 has broken records for solar PV installations.
Until early December, the MCS reported a total of 183,022 certified PV installations this year, surpassing 2022’s count by a third. Presently, an estimated 2 million UK residences, along with numerous commercial structures, generate clean, subsidy-free power from their rooftops.
Following persistent representations from SolarEnergy UK, the government scrapped the 20% VAT on power storage devices retrofitted to homes, effective from February 1st 2024.
Installers suggest that as many as a million homes with rooftop panels might have refrained from installing batteries due to the VAT discrepancy.
The VAT exemption from will cover domestic Battery Energy Storage Systems (BESS), water-source heat pumps, and diverters—devices that channel surplus power from solar or other renewables to specific appliances, primarily water heaters.
Despite the VAT challenge, the installation of batteries, both at initial stages and retrofits, surged in 2023. Recent MCS figures indicate that out of the 4,700 certified BESS devices nationwide, 4,400 were installed, with nearly 800 installations in November alone.
The number of MCS-accredited contractors for installing storage devices has soared from 50 in January to over 850 presently.
Furthermore, home-scale batteries have seen price declines similar to those witnessed in domestic solar generation, prompting more homeowners with panels to seek battery installations to maximize savings from their energy systems.
Additionally, the reduced VAT has influenced homeowners to be less inclined towards installing batteries for time-shifting and flex exercises, designed to alleviate grid stress by adjusting electricity consumption or shifting it to off-peak hours.
SolarEnergyUK, a key advocate, had long campaigned for the VAT exemption and welcomed this week’s success. Chief Executive Chris Hewett highlighted the potential benefits: “Installing a battery energy storage system can double the savings offered by a home solar installation, particularly with current energy prices.”