Energy Storage Association calls for introduction of salary sacrifice scheme for home batteries
The Energy Storage Association has published proposals for a salary sacrifice scheme for home batteries – modelled on the highly successful scheme for EVs. Lowering upfront costs would significantly boost the uptake of this crucial technology, which reduces consumer bills, strengthens energy independence and lessens the strain on the electricity grid. A VAT exemption on batteries is due to end on 1st of April 2027: the ESA is calling on the government to act now to ensure battery rollout continues to scale.
While the ESA would welcome an extension to the present VAT relief, it proposes that a salary sacrifice scheme would represent an even better response to consumer need. A 5% reduction in the cost of a battery still leaves consumers facing a sizeable upfront cost. A salary sacrifice scheme would reduce the battery’s cost, while also spreading repayments over a period of years without the need for expensive commercial financing – making it accessible to a much broader demographic.
Under the 2017 Optional Remuneration Arrangements, employees pay for the lease of an EV out of pre-tax monthly earnings, thus reducing their taxable income and generating significant tax savings. A small benefit-in-kind rate is added to the value of the vehicle; however this is at present only 4%. Applying the same tax logic to home batteries – products that also contribute substantially to consumer savings and the government’s Net Zero goals – would remove the upfront costs that prevent so many households from purchasing one. A study by Electrify Research showed such point-of-sale finance options are the most popular form of external financing for home upgrades and in particular enable households without substantial cash savings to make the investment.
The need for such cost-saving upgrades is great and increasing. The energy price cap is set to rise by 16% in January, sending domestic energy prices to record highs. A standalone battery with an appropriate energy tariff can reduce bills by 30%: it charges up when power is cheapest so that homes avoid using electricity when power is expensive during ‘peak’ hours. When combined with solar panels it can reduce energy bills by over 60% for an average dual-fuel household. Homes using electrified technology like EVs and heat-pumps can eliminate their energy bills entirely and in fact profit by selling electricity back to the grid.
That’s not the only way batteries lower consumer bills. They also reduce the amount of network grid operators must build, reducing the system costs on everyone’s bill. An estimated £150bn is being spent between now and 2041 building power lines to connect new renewable generation to the places where electricity is consumed, all paid for through consumer bills. The National Audit Office recently reported that many of these upgrades are behind schedule and may end up costing consumers even more than projected. Because home battery users run their batteries during expensive peak hours, they reduce the size of peak demand, and therefore the network capacity that must be built. Battery storage enhances the flexibility of the electricity system, with Ofgem forecasting that different forms of flexibility could provide £30-£70 billion of system savings by 2050.
The full report can be viewed here.
15th October 2026