Solar power sector seeks tax allowance parity with fossil fuel

Monokristalline Solarmodule vor sonnigem HimmelThe Solar Trade Association is seeking a number of taxation reliefs in the Chancellor’s autumn budget statement today (25 Nov 2015) – as well as clarity on the future of the Renewable Heat Initiative.

The STA says the solar thermal hot water heating market has collapsed in the UK as a result of insufficient or ineffective support under the Renewable Heat Incentive (RHI) – which is funded out of general taxation and not the Levy Control Framework.

Meanwhile, the association last night warned that if the Government proceeds with its proposed changes regarding the Feed-in Tariff and the Renewables Obligation, the ‘extreme’ cuts to tariffs and maximum deployment caps planned for solar PV will damage the economics of business investment in solar.

An STA spokesman said; “It is essential that complementary measures are implemented quickly. The Treasury’s consultation on “reforming the business energy efficiency tax landscape” –  also known as the Business Efficiency Tax Review – is seeking to harmonise the complex array of requirements for carbon reporting and carbon taxation in the business sector.

“The review presents an opportunity to incentivise and reward businesses for investment in onsite solar power so we are pressing for taxation based on accurate carbon reporting as a minimum.”

The Solar Trade Association is also looking for the extension of 100% Enhanced Capital Allowances (ECAs) to solar power. Large-scale solar power has been left with no support in the UK.

Unlike solar power, shale gas and North Sea oil operations qualify for 100% capital allowances so development capital expenditure qualifies for immediate relief. Relief is also available for decommissioning oil infrastructure after production.

The STA recommends Enhanced Capital Allowances of 100% in the first year for solar power. Currently Ireland offers solar 100% first year Capital Allowances. Solar thermal is currently eligible for 100% Enhanced Capital Allowances, and ECAs were extended to Energy-from-Waste plant in the last Budget.

“It is difficult to see why they should not be reinstated at 100% for solar power,” the spokesman added.

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed