In a letter addressed to James Murray MP, Exchequer Secretary to the Treasury, the co-signatories advocate for the inclusion of heat batteries as Energy Saving Materials (ESMs) in the upcoming Autumn Statement. The letter was sent in tandem to an industry letter on the same subject, with signatories including Centrica New Business & Net Zero, OVO, EON, and Thermal Storage UK.

The current ESM status grants VAT relief to a limited range of low-carbon technologies, predominantly heat pumps. While heat pumps play a crucial role in reducing carbon emissions, they may not suit all UK homeowners. An estimated 20% of the UK’s housing stock, representing over 5.5 million households, may have prohibitive space constraints or may not have access to a suitable local heat network.

Heat batteries offer a viable alternative, operating at temperatures equivalent to traditional fossil fuel systems and using existing home infrastructure such as pipes and radiators. They provide an effective low-carbon heating solution with running costs comparable to heat pumps. Moreover, when compared to electric boilers, heat batteries are half the cost to run.

Despite strong support from senior officials in the Department for Energy Security and Net Zero (DESNZ) and other government entities, heat batteries narrowly missed out on achieving ESM status in Autumn 2023 due to definitional issues. Since then, ongoing discussions between the DESNZ, HM Treasury, and HM Revenue & Customs (HMRC) have sought to address these barriers. However, the scope of ESM relief is yet to expanded, despite HMRC acknowledging that heat batteries meet the objectives of the scheme.

The co-signatories emphasise that extending ESM status to heat batteries will particularly benefit smaller, low-income households that lack outdoor space, alongside a request that VAT relief for all ESMs runs until 2030. This is crucial for reducing household carbon emissions by offering consumers a variety of viable and cost-effective, low-carbon heating options. 

Afzal Khan, Labour MP for Manchester Rusholme, said: “I know first-hand from my constituents the devastating impacts high energy bills are having on low-income households as thousands are driven into fuel poverty every year and so many people are still wondering how they are going to make ends meet.  

“This is why I support proposals to extend ESM status to heat batteries which, under the right policy framework, will save low-income households hundreds of pounds per year and get Britain back on track to meeting our climate targets.”

The call from parliamentarians mirrors the needs of industry. Co-ordinated by Thermal Storage UK, the industry letter recommending modernisation of the ESM technology list includes household names such as Centrica New Business & Net Zero, OVO, and EON, alongside Energy Saving Trust and the Heat Pump Federation. Co-signers include innovators of green technologies such as heat battery manufacturer tepeo.

Tom Pakenham, Commercial Director, Centrica New Business & Net Zero, said: “Helping the UK reach net-zero needs to be simple and affordable for households. Providing VAT relief on a whole range of low-carbon technology will give homeowners more choice on the solutions that will help to decarbonise their homes. We look forward to working in collaboration with the government on this and other initiatives to empower UK households on their journey to net-zero.”