Companies call on the government to 'level the field of play' by reducing energy storage VAT
To help supply up to 86,000 jobs and boost UK manufacturing, the government should reverse the VAT increase for home energy storage.
The Association for Renewable Energy and Clean Technology (REA) and a coalition of 30 industry groups called for changes to the controversial increase in VAT brought in for home energy storage in October 2019 in order to comply with an EU ruling in an open letter to the government. According to the groups, this saw the tax rise to 20 percent for many applications.
As the United Kingdom leaves the EU at the end of this month, the coalition stresses that the country can now set its own VAT rules.
In particular, given the economic pressures of the pandemic, it could help to provide tens of thousands of jobs to ease the strains on the sector by rethinking VAT.
Domestic energy storage will be key to reducing carbon emissions and, as such, the government should work to "level the playing field" for the group as indicated.
Dr Nina Skorupska CBE, REA Chief Executive, stressed that domestic energy storage in a smart home eco-system has acted as a key enabler for technologies such as solar, heat pumps and electric vehicle (EV) charging.
“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.”
In the open letter, the group of companies recommends that the VAT rate for home energy storage be reduced and that a temporary financial incentive for home energy storage be introduced. This could come in the form of an extension of the Green Homes Grants or an equivalent of an EV/EVSE grant developed, it suggests, in consultation with industry.