By Joe Warren, Powervault Founder.

This week, as I visited Solar and Storage, the UK’s annual trade show for the sector, I have been reflecting on what has changed in the UK renewables sector in the last year, from my perspective in behind the meter solar energy storage.

In November 2023 we secured a reduction in VAT for retrofit batteries from 20% to 0%.  This is something that we had campaigned for for over three years and was an important change for customers wanting to do the right thing.  It always seemed wrong to me that the tax rules would disincentivise investment in renewables in favour of fossil fuel consumption.

Across the sector we have seen battery prices fall, meaning that batteries make more sense for more customers in more situations. Interesting to see so many batteries for small industrial and commercial settings at the show this year.  Such premises have often been out of the money for batteries owing to poor time of use tariffs for small businesses.  However solar and battery storage is becoming increasingly relevant as prices have fallen.

The most significant change probably, is the general election and new Government. It feels like there is a new urgency and pace in the mission to decarbonise the electricity sector, although this does build partly on work which has been under way for some years.

The re-configuration of the National Grid ESO as “NESO” is an example of this.  When I started in the sector, the reduction of CO2 emissions was not actually in National Grid System Operator’s charter (which only required “economic and efficient” operation) although this has gradually evolved over the years. The former Government decided in 2022 that it needed a new publicly owned body to take a “whole system” approach to improve energy security, deliver net-zero and keep bills low. The current Government has pressed forward with this work, and the new, “NESO” will be operating from the 1st of October.

This week I listened to recently elected MP, Edward Morello, speaking about what could unlock the solar sector. One of his points was that the Government is going to need advice from experts in the sector to work out how best to upgrade the grid to support the transition to net zero.

What could this mean for small scale batteries?

For decades it has been clear that National Grid and the electricity markets benefit from and value flexible assets which can decrease or increase their generation.  Traditionally this has come from larger assets like gas turbines and more recently from grid scale batteries. Of course we are starting to see this value slowly appear through the introduction of new time of use tariffs from energy suppliers – which can boost the value of home batteries and other devices by providing opportunities to charge up when there is abundant (usually wind) energy on the grid and discharge to avoid peak prices.

A consideration of prices paid to large scale operators in the energy and flexibility markets suggest that small assets are still effectively blocked from accessing a significant portion of this flexibility value.  One reason is historical mechanisms did not envisage devices in people’s homes playing such an active role in helping to balance the grid.  These rules are changing albeit very slowly. The Association of Decentralised Energy, of which Powervault has been a member for many years, has recently called for a cultural shift with the NESO, supported by governance changes to increase accountability. It is hoped this will boost chances of unlocking flexibility value from small, decentralised assets. There is a growing realisation that accelerating the adoption of behind the meter batteries should reduce the investment burden on the national grid if they are used to reduce the capacity constraints in winter evenings.

Overall I feel there is reason for optimism. Products are maturing and are available at more affordable prices meaning solar plus storage makes sense in more situations.  There is renewed pace in the mission to decarbonise the sector. Over the next 12 months we should start to see more opportunities for small scale assets like batteries to benefit from supporting the grid, alongside the existing time of use tariffs and of course simply storing locally generated energy for use on site when needed.  It will be interesting to see what 2025 brings and I hope that we continue to see progress in transforming the sector, for the benefit of customers and for the UK as a whole to reach net zero as soon as possible.