Grants and funding for battery storage for businesses
UK grants, tax reliefs, and finance routes for battery storage for businesses. Updated for 2026.
There is a lot of loose talk about battery storage grants for businesses, and most of it is wrong. The honest position in 2026 is that the biggest lever for a commercial site is the tax treatment, not a cash grant, and that the widely-quoted 0% VAT relief usually does not apply to a business at all. This page sets out what a UK business genuinely qualifies for, what it does not, and how the reliefs stack.
The workhorse is capital allowances. Battery storage is plant and machinery, so the Annual Investment Allowance covers 100% of the first £1m of qualifying spend, and a 50% first-year allowance applies to qualifying spend above that. Storage is a special-rate asset, so it does not get the headline full-expensing regime, that is main-rate plant only, but AIA plus 50% FYA still pulls most of the relief into year one. Confirm the position for your accounting period with your accountant.
On VAT, be careful: the 0% rate on retrofit battery storage applies only to residential accommodation and buildings used solely for a relevant charitable purpose, and it is scheduled to revert to 5% on 1 April 2027. A standard factory, warehouse, or office does not qualify, so budget for VAT unless your building genuinely meets the residential or charitable test.
Funding and relief routes at a glance
| Route | Who it helps | Value |
|---|---|---|
| AIA + 50% FYA | Any UK company paying corporation tax | ~25% effective year-one tax saving |
| Asset finance / lease | Businesses preferring not to use capital | Spreads cost; saving can cover repayments |
| Shared savings | Sites wanting zero upfront | Provider funds; you share the saving |
| 0% VAT | Residential / charitable buildings only | 20% saving (to 31 Mar 2027, then 5%) |
| NESO grid services | Larger assets with the right metering | Volatile, treat as upside only |
The detail on each route
Plant and Machinery Capital Allowances (100% AIA + 50% First-Year Allowance)
UK businesses paying corporation tax. Battery storage and its associated infrastructure qualify as plant and machinery. The Annual Investment Allowance covers the first £1m of qualifying expenditure at 100%. Solar and storage are special-rate assets, so a 50% first-year allowance applies to qualifying expenditure above the AIA cap.
- Value
- Up to roughly a 25% effective first-year tax saving for limited companies, depending on how spend sits against the £1m AIA cap.
Important: the 100% full-expensing regime applies only to main-rate plant. Solar and storage are special-rate, so they do NOT get full expensing, they use AIA (100% to £1m) then 50% FYA on the balance. Confirm the position for your accounting period with your accountant.
Smart Export Guarantee (SEG)
MCS-certified installations up to 5 MW exporting to the grid. A battery lets you shift export into higher-priced windows on a time-of-use export tariff rather than spilling surplus at midday.
- Value
- Typically 4-15p/kWh, supplier-set, with time-of-use export tariffs paying more in peak windows.
For most business sites, storage adds more value by lifting self-consumption than by exporting. Treat export income as a secondary stream. Tariff is supplier-set, so shop the export rate.
0% VAT on Energy Saving Materials (residential and 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 (a 20% saving versus the standard rate).
This relief is residential/charitable, not general commercial. It runs to 31 March 2027 and is then set to revert to 5% (not 20%). Relevant only for mixed-use, residential-portfolio, or charity-occupied sites, a standard factory or warehouse will not qualify.
NESO Grid Services (Dynamic Containment / Moderation / Regulation, Balancing Mechanism, Capacity Market)
Storage assets meeting metering, response-speed, and accreditation requirements can provide frequency response and balancing services to the National Energy System Operator (NESO). From January 2026 the dynamic frequency services are activated directly within the operational baseline process, and revenue stacking across Dynamic Containment and the Balancing Mechanism is permitted.
- Value
- Highly variable and market-set. Frequency-response prices have become volatile and saturated, treat any income as upside, not the core case.
Mostly relevant to larger behind-the-meter and grid-scale assets with the right metering. For a typical business battery we model demand-charge and self-consumption value as the case and treat grid-services income as a bonus.
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 is 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, larger industrial schemes only.
Run by DESNZ through periodic competition windows. Not for small standalone batteries. Check the current window status before relying on it.
Map the right funding route for your project
Responds within one working day
- 1. Free desk feasibility from your meter data and roof, no obligation.
- 2. Site survey and a fixed-price proposal, itemised in writing.
- 3. Install and aftercare by MCS-certified engineers.
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- NICEIC
- RECC
- TrustMark