UK home battery market lagging behind rest of Europe

The UK home energy storage market is lagging behind those of European neighbours because of an “unfavourable” policy regime, according to a new report from Wood Mackenzie.

The energy consultantcy predicts that cumulative home battery installations in Europe will grow five-fold to 6.6GWh by 2024 as it reaches the economic tipping point.

But the British market is expected to be held back by a planned increase in VAT for many home solar and battery storage installations from a reduced rate of 5 per cent to the standard 20 per cent.

“The major European markets of Germany, Italy and Spain are moving towards grid parity for solar-plus storage in the residential space, when the costs of KWh of power from the grid meet the cost per KWh of the solar-plus storage system,” said Wood MacKenzie senior research analyst Rory McCarthy.

“The economic tipping points for the UK and France are further away,” he added. “Both are hindered by more expensive systems on a cost per KWh basis and unfavourable or yet-to-be-developed storage frameworks.

“Grid parity will not be achieved over our outlook period. However, deployments are expected to continue irrespective of this.”

The planned VAT increase for solar and battery systems is due to come into force on 1 October.

The legislation was laid before Parliament in June, on the same day that the adoption of net-zero greenhouse gas emissions by 2050 was timetabled for a House of Commons debate.

The Renewable Energy Association (REA) has already warned the tax rise could delay the decarbonisation of UK homes and businesses by a “number of years”.

“The VAT proposals will create a barrier to British homes and businesses who are seeking to take action on climate change and reduce their bills by installing solar with battery storage,” said REA chief executive Nina Skorupska.

And the chief executive of Good Energy, Juliet Davenport has warned the increase is “possibly the worst way to respond to a climate emergency”.

“The government should be seeking to be a world leader in renewable technologies, but it’s damaging our successful solar industry and putting green jobs at risk. We urge the Treasury to listen to the thousands of petitioners who want to play their part in fighting climate change.”