The UK risks being left behind in Europe’s home battery boom because of a controversial tax hike on solar-battery systems, according to a report.
The energy consultancy Wood Mackenzie has predicted that Europe’s home battery capacity could climb fivefold in the next five years as more households plug their rooftop solar panels into battery packs.
The analysts expect that by 2024, annual home battery installations across Europe could total more than 500MW, the equivalent of building a new gas-fired power plant every year.
The report said the battery boom had already taken hold in Germany and would accelerate across Italy and Spain as battery power became more economic.
However, the UK is likely to lag behind its European neighbours due to its “unfavourable” policy frameworks and a VAT increase for solar-battery packs this October.
Rory McCarthy, a senior researcher at Wood Mackenzie, said Germany’s lead had made Europe the largest residential storage market globally.
“Off the back of Germany’s success, residential storage is beginning to proliferate into other European countries, particularly where market structures, prevailing power prices and disappearing feed-in tariffs create a favourable early stage deployment landscape,” he said.
“The economics of storage have been challenging in the past, however we are in the midst of an economic tipping point.”
The UK’s laggard status comes after the government vowed to put energy storage at the heart of its plans for a cheap and clean energy system, which included a £246m pledge to develop battery technology.
Greg Clark, the former business secretary, said the falling cost of energy storage meant it had a role to play in making renewable energy “abundant”.
It will be more difficult for households to access the potential of low-cost renewable energy after the VAT hike on solar batteries installed from October.
The UK has blamed EU rules for the VAT change, a claim disputed by Molly Scott Cato, a Green MEP for South West England.
“There is appetite from [UK] utilities and technology providers but the market has no incentives so is lagging behind thus far,” said the report. “The recent VAT increase from 5% to 20% confirmed to begin in October 2019 is not an effective way to kickstart a market with challenging economics.”
