Modernising the technology list for energy saving materials
Towards the end of May 2023, Thermal Storage UK joined forces with a diverse bunch of organisations to call for the UK government to make it cheaper to install flexible electricity products. The co-signatories to the joint letter, coordinated by Thermal Storage UK, recommend extending VAT relief to batteries, smart thermal stores and EV chargers. This would take off the 20% VAT from the cost of supplying and installing these products.
Our view is simple. No new technology has been added to the list of technologies that qualify for VAT relief since 2006. A lot has changed in the last 17 years. Renewables are now established as a major force in the power system and demand-side products are readily available to households. If we’re going to successfully build an electricity system powered by renewables, that system requires a mixture of technologies to provide demand-side flexibility.
Extending VAT relief to flexible technologies will reduce the cost to people, which in turn will support the rapid take-up of the products. These technologies lower overall system cost by reducing the need for at least some infrastructure upgrades, potentially lowering bills for everyone. And extending VAT relief better joins up energy policy and tax policy. Using demand-side flexibility to make better use of renewable power will help the government to achieve its target of reducing energy demand by 15% by 2030.
The importance of this smart flexibility is shown by the mix of signatories to the letter organised by Thermal Storage UK. We have distribution networks, energy suppliers, aggregators, consumer and innovation groups, energy efficiency experts, building societies, trade associations and manufacturers of thermal stores and batteries.
The full list of signatories to the joint letter are Thermal Storage UK, Caldera, Sunamp, tepeo, Skipton Building Society, UK Power Networks, Citizens Advice, Nesta, BEAMA, Sustainable Energy Association, E3G, Powervault, EON, Ovo, EDF, Flexitricity, Energy Saving Trust, Association for Decentralised Energy, E3G, Eco Mirage UK, Fischer Future Heat, Think Electric Heating, Heatio and the Heat Pump Federation.
For Thermal Storage UK, heat flexibility is particularly important to future system design. The UK could have 3 million heat pumps on the electricity system by 2028, nearly a 10X increase in just 5 years. Each of these heat pumps will have a thermal store of some kind, whether a hot water tank or a smarter product. We can use the flexibility of smart thermal stores to design heating systems that keep homes warm and support the power system. Extending VAT relief to smart thermal stores helps achieve this when people upgrade their heat pump systems by installing a new thermal store, such as a Sunamp.
Thermal Storage UK also supports extending VAT relief to smart thermal stores that work instead of heat pumps, such as those produced by tepeo. While heat pumps will be the right choice in many homes, other low carbon solutions are required for millions of homes. These heating technologies will help to ensure that we decarbonise homes with the right technologies for the building and the occupants. The government already has a ready-made definition of smart thermal stores – or heat batteries – from its work on Energy Smart Appliances and the Energy Bill.
We look forward to hearing more from HM Treasury this autumn.