Grants and funding for commercial battery storage installation
UK grants, tax reliefs, and finance routes for commercial battery storage installation. Updated for 2026.
There is no general UK grant for commercial battery storage. The main levers are tax (capital allowances), export income where the battery is paired with generation, and, for residential or charitable buildings only, the 0% VAT relief (until 31 March 2027). The Industrial Energy Transformation Fund, still mentioned in older guides, closed in July 2025. Each route below links to the official source; confirm your own position with your adviser.
Funding routes and tax reliefs
Plant & Machinery Capital Allowances (AIA; full expensing or 50% FYA depending on classification)
Plant and machinery capital allowances. The Annual Investment Allowance gives 100% relief on up to £1m of qualifying spend a year. Above that, the rate depends on how the battery is classified: main-pool plant can qualify for full expensing (companies), while special-rate expenditure gets a 50% first-year allowance. Solar panels are special-rate by statute; batteries are not named in that list, so the classification of a given installation is a question for your adviser before you model it.
- Value
- Depends on your tax position and how the spend is classified; the AIA covers up to £1m of qualifying spend a year.
Do not assume full expensing or assume it away: confirm the classification of the battery and its installation costs with your accountant for the relevant period. Source: gov.uk capital allowances guidance.
Smart Export Guarantee (SEG)
Pays for electricity exported from eligible generation such as solar PV (up to 5 MW). Suppliers set the rate and some pay more in peak windows, which a battery can target. Check how your supplier treats exported battery energy before relying on it.
- 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): closed
The Industrial Energy Transformation Fund closed in July 2025 with no successor fund; its last application window shut in April 2024, so it is not a route for new battery projects.
- Value
- Not available: the fund is closed.
Listed only because older guides still mention it. For new projects look at capital allowances, SEG export income and, inside a designated Freeport or Investment Zone tax site, the enhanced capital allowances there.