By Johan du Plessis, CEO, tepeo
We had some excellent news in September – heat batteries, such as the ZEB, are now officially included in the Warm Homes: Social Housing Fund. This is a significant moment for tepeo and the heat battery sector, signalling the growing support from the UK Government of the role for heat batteries in decarbonising homes.
This was not just a win for the industry, but for hundreds of thousands of social housing residents who now have the opportunity to heat their homes more sustainably and affordably.
However, while this progress is encouraging, there is more to be done. At present, heat batteries are still not classified as an Energy Saving Material (ESM), which means customers are still paying VAT when they’re trying to do the right thing. The next logical step for the government is to extend VAT relief to heat batteries, as they already do for other low-carbon technologies like heat pumps. This would help accelerate adoption, give customers choice and make it more affordable for all households to make the switch. The change is supported by over half the energy supply market (including OVO & Centrica) and organisations like the Energy Saving Trust, Heat Pump Federation and Energy Systems Catapult.
Why is VAT Relief for Heat Batteries Necessary?
While heat pumps receive financial support through VAT relief and subsidies, heat batteries are still excluded, limiting the options available for households to adopt low-carbon technologies at reduced costs.
For around 20% of UK homes unable to accommodate a heat pump, extending VAT relief to heat batteries would make affordable, sustainable heating solutions available to more people. This would not only accelerate the adoption of green technologies but also help the UK meet its decarbonisation targets – while keeping consumers onside.
Consumer choice will be critical for a successful green energy transition, and it’s crucial that households are allowed to select the heating solution that best fits their needs. Every home is different, with varying sizes, heating demands, and existing infrastructure. Some households will find heat pumps ideal, while others, especially those with smaller properties or more challenging conditions, will benefit from heat batteries.
The ability to choose between different technologies allows consumers to make informed decisions based on their specific circumstances, whether it’s space, budget, or ease of installation. Ensuring that all low-carbon heating options, including heat batteries, are accessible and supported through financial incentives like VAT relief will give consumers the flexibility they need to make the right choice for their home and the environment.
Making Green Home Heating More Accessible and Affordable
The ZEB is designed to offer households a smarter and greener alternative to traditional fossil fuel boilers. By storing heat generated using off-peak electricity – which is both cheaper and greener – the ZEB allows customers to heat their homes on demand, without the carbon emissions associated with gas or oil boilers.
For households currently relying on electric boilers, switching to a heat battery like the ZEB results in significant savings, with many customers reducing their annual heating costs by up to £1,500. The ZEB’s flexibility can halve running costs compared to traditional electric boilers, offering a more affordable way to heat homes.
While the initial investment in a heat battery may seem higher, the long-term savings on energy bills make it a financially sound decision. Over time, the additional upfront cost is easily recouped through lower running costs, making it an attractive option for households looking to both save money and reduce their carbon footprint.
To further support customers, we’ve introduced flexible finance options, in collaboration with Vendigo and Humm, making it easier than ever for households to afford a ZEB. This includes a limited-time, interest-free offer available until 25th October 2024, allowing customers to spread the cost of installation in a way that suits their financial situation. Our goal is to remove as many barriers as possible, enabling more households to make the switch to low-carbon heating solutions.
Customers can easily check if their home is suitable for a ZEB through our website, customise their finance plan, and schedule delivery and installation – making the process as simple and accessible as possible.
The Call for VAT Relief
While both the Warm Homes Social Housing Fund and flexible finance options are major steps forward, we strongly urge the new government to also extend VAT relief to heat batteries for central heating. Doing so would address the existing market distortion and empower more homeowners to make greener choices. The inclusion of heat batteries in the SHDF is a clear signal that the government understands the importance of this technology – now is the time for further action.
tepeo will continue to champion the vital policy and regulatory changes needed to make low-carbon heating a reality for everyone – not just those in larger homes who can afford to prioritise decarbonisation over cost.