Grants and funding for commercial battery storage installation
UK grants, tax reliefs, and finance routes for commercial battery storage installation. Updated for 2026.
Funding routes for this sector
Plant & Machinery Capital Allowances (100% AIA + 50% First-Year Allowance)
UK businesses paying corporation tax. Battery storage and associated installation infrastructure qualify as plant and machinery. The Annual Investment Allowance covers the first £1m of qualifying expenditure at 100%; storage is a special-rate asset, so the 50% First-Year Allowance applies to qualifying expenditure above the AIA cap.
- Value
- Up to ~25% effective tax saving in year one for limited companies, depending on how spend sits against the £1m AIA cap.
Storage is special-rate, not main-rate, so it uses AIA (100% up to £1m) then the 50% First-Year Allowance on the balance, NOT full expensing. Confirm the position with your accountant for the relevant accounting period.
Smart Export Guarantee (SEG)
MCS-certified installations up to 5 MW exporting to the grid. A battery can time exports into higher-priced windows on flexible export tariffs rather than spilling surplus at midday.
- Value
- Typically 4-15p/kWh, supplier-set, with time-of-use export tariffs paying more in peak windows.
Storage adds most SEG value by shifting export into higher-priced periods. Tariff is supplier-set; shop around.
0% VAT on Energy Saving Materials (residential & relevant-charitable only)
Since 1 February 2024 the zero rate covers standalone retrofit battery storage connected to the grid, but only in residential accommodation or buildings used solely for a relevant charitable purpose. General commercial premises do not qualify.
- Value
- 0% VAT on supply-and-install for eligible buildings (saving 20% vs the standard rate).
This relief is residential/charitable, not general commercial. It is scheduled to run to 31 March 2027, after which it is set to revert to 5% (not 20%). Relevant only for mixed-use, residential-portfolio, and charity-occupied sites.
Industrial Energy Transformation Fund (IETF)
UK industrial sites in eligible SIC codes. Capital grants for energy efficiency and deep decarbonisation; storage can feature where it forms part of a wider qualifying decarbonisation project rather than a standalone battery.
- Value
- Typically £100,000-£30m per project at a 30-50% intervention rate, large-scale only.
Operated by DESNZ via periodic competition windows. Not for small standalone batteries. Check current window status before relying on it.