Local communities across Scotland are in a race against time to secure funds for renewable energy projects, following plans to cut off a vital UK tax credit for community energy investors.
Projects in Edinburgh, Shetland, Applecross and Kinross risk being hit by UK government plans to close its Enterprise Investment Scheme, which allows investors to claim income tax relief of 30% on their investment.
It could mean the difference between a return of up to 7% on their investment, compared to about 5%. Now Energy Minister Fergus Ewing is backing their call for investment.
The UK Government’s move has been called an ‘unheralded attack’ by Paul Phare from Energy4All, who sits on the board of the Edinburgh Community Solar Co-operative, which hopes to become Scotland’s largest community-owned urban scheme.
He said: “There are a number of schemes across Scotland which are already well advanced in raising the investment they need to enable their projects to go ahead. This move by the UK Government is the latest in a series of unheralded attacks on the renewable energy sector, including future cuts to feed in tariffs.
“The irony is we are now at the point where sustainable, local green energy schemes are becoming popular with local communities yet the Government seems intent on snuffing out this growing enthusiasm which has proved so successful in other European countries.
“The EIS scheme remains open until the end of this month and I would encourage anyone with an interest in helping to support these vital projects to take advantage of the scheme by 27 November.”
Fergus Ewing, Scottish Energy & Enterprise Minister, added: “Local ownership gives communities more control over their own energy and will help us tackle challenges like grid constraints and fuel poverty – while at the same time sparking economic revival.
“There are many communities who have invested significant amounts of money in renewables but this is yet another setback for the community energy sector which the UK government claimed it wants to support though we have not seen any evidence of to-date.
“This takes away one of the competitive aspects of community energy in terms of being able to raise capital cheaply. It also further undermines getting new electricity generation onto the grid, which is foolhardy given National Grid’s recent assessment of a further tightening of the gap between electricity supply and demand.
“Local Energy Scotland is working with community groups who are seeking to raise capital in this way to get share offers completed before the deadline.”
Other schemes, including the Rumbling Bridge Community Hydro Society near Kinross and the Applecross Community Company are also calling on investors to back their schemes now before they close their share offers on 27 November.
Alison Macleod, development officer for the Applecross Community Company, commented: “The EIS tax break was designed to help ordinary people invest in renewable energy schemes and has encouraged lots of folk in the peninsula and the wider Wester Ross community to back our project,”
“The UK government announced the change out of the blue and this will leave many schemes struggling to raise the local investment they require”.
“This is not making life easy,” added Hugh Wallace from Glendevon Energy which is building a hydro scheme at Rumbling Bridge near Kinross. “So far we have raised more than £2 million and we are now hoping we can raise a further £850,000 before the EIS closes at the end of this month.”
Investments in shares of renewable energy co-operatives and community benefit societies are long term investments to deliver an environmental and social impact as well as a financial return. As with any investment there are risks. Your capital is at risk and may not be readily realisable.
A community energy map, developed on behalf of the Scottish Government and in partnership with Scene Consulting, shows the combined total of all projects, currently contributing 510MW of installed capacity across the country. You can browse the map at: www.localenergyscotland.org/projects