Guy Clark, Policy Analyst at the ESA.

The Warm Homes Plan is a welcome and vital intervention to tackle high energy bills and poor-quality housing, while helping the UK drastically reduce its carbon emissions. It rightly recognises the crucial role battery storage plays in helping consumers maximise the benefits of solar PV and heat pump installations. However, to fully realise the potential contribution of battery storage to affordability and consumer-led flexibility, there are key opportunities for the plan to go further.

The government have committed almost £15 billion to investment in home upgrades and support for up to 5 million homes. This includes £5 billion in grant funding for those on low-incomes, combined with £2 billion of universally available no-interest and low-interest loans, to access the full range of renewable home upgrade technologies. This is an historic step, providing much needed signals to the market, and making great progress in overcoming the historic barriers to access faced by many renters and homeowners. Done well, this programme can transform homes into flexible, affordable “energy hubs” that support both household budgets and the wider electricity system.

Battery storage is the critical technology that turns intermittent rooftop solar and low-carbon heating into consistently lower bills and a more flexible grid. DESNZ’s analysis identifies that an average three-bedroom home could save up to £500 a year on their energy bills by installing solar PV, heat pump and battery storage systems. This rises to up to £800 a year if a time-of-use tariff is used to ensure consumers are charging their battery during off-peak hours. The potential contribution of batteries and flexible tariffs to consumer savings is huge. The ESA welcomes the Plan’s commitment to put such savings within reach of “all working people”.

Furthermore, the ESA supports the government’s moves to strengthen innovation, skills-development and consumer trust in new energy storage measures through:

• Providing new £2,500 grants for heat batteries.
• Providing targeted finance to support community-led energy co-operatives; implement bulk purchasing schemes that drive down costs; or develop Energy-as-a-Service markets where upgrades can be funded through monthly subscriptions.
• Using the Warm Homes Fund to invest in skills training programmes for installers of solar PV, batteries and heat pumps.
• Strengthening consumer protections and setting up the Warm Homes Agency, to avoid the mistakes of the Great British Insulation Scheme.

Despite its strengths, the Warm Homes Plan leaves important gaps that risk limiting the contribution of battery storage to affordability and grid flexibility. The ESA will continue to work with the government to champion the following measures:

1. Long-term VAT reform for batteries: A clear, long-term commitment to extending zero VAT on battery storage beyond 2027, including retrofit installations and those paired with existing solar or heat pumps. This would send a powerful signal to households and supply chains. Current tax treatment creates unnecessary complexity and can discourage optimal retrofit pathways, particularly for households that have already installed solar and now wish to add storage. Aligning VAT treatment for batteries with other core energy-saving technologies would ensure fiscal policy tackles the full range of barriers to whole-home flexibility.
   
   
2. A salary sacrifice scheme for home storage. The Warm Homes Plan builds on the success of previous innovative schemes. Salary sacrifice schemes are another successful model that has increased uptake of electric vehicles and cycle-to-work bikes. A similar mechanism for home batteries would enhance the Warm Homes Plan’s efforts to spread the costs of home upgrades and speed up the rollout of clean technologies. It would allow consumers to benefit from tax efficiencies while immediately reducing their bills and exposure to price volatility.

The ESA eagerly awaits the government’s proposed Call for Evidence later this year on more potential uses for the Warm Homes Fund, where we will be submitting these suggestions. We will be working with various government departments to ensure:

• Battery installation and design expertise is recognised and supported within official skills programmes and accreditation pathways.
• The Warm Homes Agency is adequately supported with expert know-how on battery sizing, safety, interoperability and selection of reputable installers and products.
• Certifications and consumer protections for storage technologies are developed to the highest standards.
• Use of storage provides the most benefit to consumers and taxpayers.

The Warm Homes Plan rightly aims to cut bills, tackle fuel poverty and modernise the UK’s ageing housing stock. To achieve these aims, homes must not only be warm and efficient but also flexible – capable of generating, storing, and intelligently using energy in ways that lower system costs for everyone.

By embracing domestic battery storage more fully – through long-term VAT reform, a salary sacrifice scheme, and integration into skills, standards and consumer advice, the government can ensure the Warm Homes Plan delivers on those aims. The energy storage sector stands ready to work with ministers, officials, and delivery partners to ensure that every pound invested in home upgrades delivers maximum value to households, the grid and the wider economy.

22nd January 2026