A letter penned by energy supplier Bulb and signed by over 30 industry organisations is calling on the government to reduce VAT rates for green technologies, including solar and energy storage.
If the VAT was reduced to zero – as the letter recommends – then this would boost consumer spending on green technologies, stimulate growth and create highly-skilled green jobs across the UK. In particular, this will benefit clean tech businesses, which will grow and create jobs as a result.
Organisations to have signed the letter - which is addressed to Prime Minister Boris Johnson - include the REA, Moixa, Sunamp, Social Energy and Citizens Advice among others. The letter stated that while the government is showing "global leadership" with its net zero targets and policies, "we were disappointed at the lack of policies to help people play a part in reaching net zero" in the 2021 Budget. It warned that with the closure of the voucher scheme as part of the Green Homes Grant and reduction in grants for EVs, there is now a risk families will be "priced out of the switch to green technology".
In the letter, solar panels were identified as one technology that would benefit from VAT exemption, alongside energy storage devices including heat batteries, heat pumps, electric vehicles (EVs) and associated charging infrastructure and insulation and energy efficiency fittings, among others.
Many of these technologies are currently levied at the full 20% VAT rate, including energy storage, a change that came into effect in 2019, prompting a backlash from the industry, including the Association for Renewable Energy and Clean Technology (REA) and a coalition of 30 industry groups which called for a lower rate for the technology to help “level the playing field”.
Today’s new call follows Bulb publishing data in March that found removing VAT on green technology could save households in the UK around £5,500. The supplier gave the example of solar PV, stating that the average cost of solar panels is £7,500 with the current VAT level set at 5% but by dropping that to zero the cost could be reduced by £357.