Business rate threat to solar remains

3rd October 2016

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  • Generation ,
  • Renewable ,
  • Business & Industry ,
  • Energy



The solar industry is ramping up pressure on ministers to reverse a six- to eightfold rise in business rates on firms generating solar power for their own consumption.

On Friday, the Valuation Office Agency (VOA) published it draft rateable values for 2017 for all properties that pay business rates. These revealed that it was still planning to go ahead with significant increase in rates on solar energy generation equipment from April 2017, according to the Solar Trade Association (STA).

The proposal would see businesses with a typical 100kW installation paying £2,700 a year instead of £400, the trade body said. Return on investment would fall by around 2.5%, the STA calculated, which it said would damage the economics of existing and future commercial solar projects.

The STA has been seeking to raise awareness of the threat for several months. It said the problem stemmed from the way the VOA calculates rates. The agency uses rules dating from 2000, which apportion a higher rateable value to assets, such as solar panels, that generate electricity for self-consumption rather than export.

The government would need to introduce secondary legislation to change these rules, the STA said. Energy minister Jesse Norman told MPs in September that the government would ‘look closely’ at what the VOA was proposing once the draft rates were published.

Nick Wood, policy analyst at the STA, said: ‘It will be a political decision on whether they want to make that intervention. The ball is now in their court.’

He said many large corporates that had invested in solar power generation to increase energy security and lower their carbon emissions were angry and frustrated about the changes. Nearly half of FTSE100 companies are now generating their own renewable energy with much of this from rooftop solar, data published on Friday from consultants Carbon Clear revealed.

Schools and public sector organisations that have invested in solar microgeneration (under 5MW) might also be hit by the proposed changes to rates. Currently business rates do not apply to microgeneration but the government has yet to confirm that this exemption will be maintained. There are 23,000 non-domestic solar roof installations in the UK between 10kW and 5MW, according to the STA.

Companies that use solar power to generate mainly for export to the grid or to tenants through a power purchase agreement will see their rates fall from 2017, after an agreement between the VOA and the STA last month. The rateable value has fallen in line with the value of the asset as well as the income received, the trade body said.

The STA is expecting a decision from ministers around the time of the autumn statement on 23 November, when the business rate multiplier is set.


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