VAT slashed to 0% on Solar PV Systems

April 01, 2022 by Greg Bishop

The slashing of VAT on PV systems to 0% and the enormous energy price increases, means interest in the renewable technology will continue to surge, says NGRE, as consumers try to avoid exorbitant charges and take more control of their energy.

0% VAT on PV for 5 Years

In a recent statement, Chancellor Rishi Sunak announced that VAT on PV systems – equipment and fitting – would be reduced from 5% to 0% for 5 years, in response to massive energy price rises, a move that is expected to entice more people into investing in a system.


NGRE’s own figures show consumers reacting to the worrying price trends sooner, with a huge increase in enquiries for PV systems in the first quarter of 2022.

Compared with January 2021, NGRE received five times as many enquiries in the same period this year, while in the run-up to the worrying 54% energy price cap increase on April 1st 2022, the company received nearly ten times as many enquiries in March 2022, compared with the same period last year.

Energy Prices a Big Factor

Greg Bishop, Managing Director of NGRE, said: “Interest in PV has definitely increased massively and clearly the energy price hikes are a big factor.

“People are coming out of a fixed tariff, being put onto a standard variable and they’re finding their bills not just going up but doubling and it’s a shock; it can be scary.”

From April 1, 2022, the energy price cap for electricity increased from 20.8p per kWh to 28.34p per kWh, while gas increased from 4.07p per kWh to 7.37p per kWh, meaning, according to Ofgem, the annual bill for a typical household will rise from £1,277 to £1,971. A further increase in October also looks likely.

Price-Rise Protection

Greg said: “Customers are saying to us that they need to start making savings somewhere and are seeing PV systems as a genuine way to save money.

“They’re also saying they want more control over their energy costs, not beholden so much to the energy companies. By generating their own power, with PV systems, they can have this to a degree.

“PV systems can help insulate you from rises in energy costs.”

He added: “This is even more important with consumers bracing themselves for more energy pain in the near future when the price cap is reviewed and expected to increase in October and with electricity demands set to increase in the future, with people adopting electric vehicles.”

PV Systems Increasingly Attractive

Greg said: “While energy costs surge, the cost of equipment is continuing to drop, particularly with the drop to 0% VAT which also includes fitting. Its making a system more affordable and the return on investment increasingly attractive.”

PV Savings – The Figures

Using 4000 kWh of electricity, as an average figure for a household’s yearly usage (Ofgem’s Typical Domestic Consumption Value (TDCV) is 2,900 kWh for a 3 – 4 bedroom house, but we think this is unrealistic) a 4.8 kWp PV system is estimated to generate 26% of a user’s electricity needs, while the addition of an 8.2 kWh battery storage system, will increase this to 76%.

A 5.6 kWp system is estimated to provide 28% of a user’s electricity needs, with an 8.2 kWh battery storage system increasing this to 79%.

Using 4000 kWh again, if a consumer were paying the top rate of 28p per kWh, their annual bill would be £1,120. With a PV system, a 26% reduction would save £291 per year, while a 28% reduction would save £325 per year. With the addition of a battery storage system, a 76% reduction would see a £851 cost saving per year while a 79% reduction would see a £885 cost saving. *

*Figures are based on MCS calculations. An individual survey is required for more accurate figures for a property. Pitch and orientation of roof, shading, size of array that can be fitted and household occupancy can all effect estimates.

Customer’s Electricity Bill Has Doubled

Lewis Sigsworth, from Oxfordshire, recently contacted NGRE, and is considering fitting a solar system with battery storage after seeing his electricity bill double.

He said: “I’ve considered it before, but now my direct debit for electricity has doubled I think we’re going to proceed; It just makes financial sense.

“We also use oil for heating so I’m planning to use the system to power my immersion heater reducing my reliance on oil which has also more than doubled.”

He added: “It’s not about the Feed-in-tariff now. It’s about how much your electricity bill is per month and how you can reduce it.”

Education in Consumption

Greg said: “Lowering bills is not just about lowering the cost of the energy you use though. The energy industry should be doing more to educate people about how they consume their energy. The easiest way to cut bills is if you can lower your consumption as well, but people will start to do this naturally as price rises start to bite.”

Are you interested in solar PV, battery storage or EV charging solutions?

If you’re interested in taking advantage of the benefits of a solar PV system, battery storage system or EV charging point, from an MCS and NICEIC installer, fill out our contact form, and one of our experienced team will be in touch.

NGRE specialise in the supply of the latest renewable solutions for architects, builders and homeowners in Oxfordshire and surrounding areas and have more than 10 years’ experience.