Should you be purchasing solar battery storage now that it’s VAT free?

Domestic solar PV installations, and combined battery and solar PV projects, have been VAT free since 2022; and from the start of February 2024 stand-alone domestic battery installations now enjoy the same VAT free status.

The announcement of the change to legislation definitely created a short concertina in the market, with homeowners delaying a battery installation so they could enjoy the VAT savings, but should all homeowners with solar PV now purchase a battery? We believe they should absolutely investigate the potential benefits.

Early adopters

The domestic battery market is in its infancy, with very early adopters of batteries installing their storage systems installed around 10-15 years ago, but the installation of domestic batteries really emerged from around 2016 onwards. Amongst a number of first manufacturers and models to enter the domestic market, the Tesla Powerwall emerged as an expensive, but reliable market-leader.

Very few individuals investigating battery storage in the early to mid-2010s would have seen a cost saving unless they had a very large solar PV array to feed it and very high electricity usage in their home and many would have been fitted for other reasons such as wanting to be off-grid and self-sufficient.

Tesla Battery

Unlike early adopters of solar PV, who benefited from the Feed-In-Tariff, early adopters of battery storage have not received any additional financial perks.

Current domestic battery market  

Over the last 10 years the cost of installing solar batteries has decreased significantly, products have become relatively standardised and reliable with the development of LiFePo4 (lithium iron phosphate), and more and more inverter manufacturers have developed their own units designed to work seamlessly with their other products. The domestic household battery market has grown steadily, with the curve steepening since 2022 as homeowners protected themselves against the energy crisis.

Geo Green Power has been installing domestic solar PV for over 14 years, and making recommendations to our customers on whether batteries are a viable option. In the last two years, investing in battery storage has been making more and more financial sense. The combination of higher energy costs and cheaper battery installations has made returns significantly more favourable and many of our domestic installations are now combined solar PV and battery systems, with all our residential customers being given the option.

When does battery storage stack up for home-owners?  

If you fit into one of the six categories below, we feel you should be looking into adding battery storage for your home.

  1. You installed your solar panels over 6 months ago
    The costs of battery units have fallen so rapidly in recent months that even if you looked at the possibility as recently as 6 months ago, it may well be worth investigating again. A review of your solar generation, electricity usage and electricity unit price will soon help an installer understand whether or not a battery would make sense for your property.

  2. You are exporting a lot of your generated energy
    With today’s high energy prices, it’s often more cost effective to store and use the energy that you produce retrospectively rather than exporting to the grid. If your system was set up to generate more energy than you use in order to benefit from export, you will likely discover that it’s now more cost effective to use it yourself.

    Unlike commercial properties, which have very static periods of energy usage, residential property usage often changes. You may have had children move out, or family back in, or you may now work less frequently from home. If you export a significant amount of energy during the day and consume a large amount later in the afternoon and evening, a battery should now make more financial sense.

  3. Your energy prices have gone up significantly
    Since the start of 2022, global events have heavily impacted UK energy prices and the Government have had to cap domestic unit rates to keep them more affordable for homeowners. In the last few months prices have stabilised, but the removal of the price cap has meant some households have continued to see increases.

    On the other hand, some customers are fixed into tariffs well above the UK average for the next year or so. If you ruled out a battery based on your original energy prices, you might find a VAT free unit with current energy prices to be a sensible addition for your investment.

  4. You have room for additional solar PV
    If you are currently using the majority of the electricity that your solar panels produce and you’re purchasing a significant amount of electricity during the day, evening or overnight, it could be worth looking at a second system combined with batteries. You would need a suitable location for a second array of solar panels, but a hybrid battery and solar installation could provide you with the additional energy you need, when you need it.

  5. You have dual rate electricity costs
    A number of energy providers offer dual rate tariffs, providing electricity at cheaper rates overnight. As we approach the 2035 ban on petrol and diesel vehicles, an increasing amount of EV charging rates are available to encourage overnight charging for eligible EVs.

    Some of these rates are as low as 7p per unit, and depending on which tariff you can secure, and the amount of energy you require, a combined solar and battery storage system could enable you to run your property entirely from free solar energy and cheap rate electricity stored in your battery.

  6. You have never investigated renewable energy for your home
    Of course, if you’re yet to install solar panels or consider battery storage, the current zero VAT rate gives you a very good reason to investigate how solar PV and battery storage can deliver cost savings on electricity bills, improve your energy security, and do your bit to combat the climate crisis.

A quick phone call with our surveyors will help you understand the possibilities for your home, as well as the cost savings and payback.

Geo Green Power have been installing solar PV, battery storage and other renewable technologies in UK homes since 2010. If you’re interested in finding out whether battery storage, solar PV or a combination of the two to your property, give us a call on 01509 880 199, or request a quote through iether our Commercial or Domestic contact forms, and our team will be happy to help.

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