UK: Government reverses tax relief for community solar

Share

The Conservative government’s ideological assault on U.K. solar has reached community energy this week, with Treasury Minister David Gauke announcing on Monday that community energy schemes that receive subsidies – such as FIT-backed solar PV arrays – will no longer be eligible for EIS tax relief from November 30.

The EIS tax relief scheme had allowed modest but encouraging growth of the U.K.’s community solar sector, aided by previously more generous FIT rates prior to the cuts announced in July. Cooperative schemes and communities were given confidence to invest in shared solar projects that were eligible for the Enterprise Investment Scheme (EIS), which encouraged investors to invest in small companies and receive a 30% tax relief.

With the aid of this scheme, community solar in the U.K. grew to 175 separate schemes, delivering 30 MW of solar power in the process, according to data gathered by Greenpeace. The planned pipeline extended to an additional 143 MW, but now the removal of the EIS – and the extension of a policy that also makes community solar ineligible for Social Investment Tax Relief (SITR) – threatens to derail altogether this growing sector.

"This is a complete reversal of previous announcements made in the 2014 Autumn Statement and Budget 2015 statement," said James Wright, Co-operatives U.K. policy officer. "We had expected that an expanded SITR would be opened to community energy schemes while EIS would continue for six months after changes to SITR gained State Aid approval."

Wright argued that Co-operatives U.K.’s research from last year – which revealed that a removal of all tax relief could see a 59% drop in community investment in renewables – was simply ignored by the government.

"Given that we fought so hard last year to secure continued support for community investment in renewables, including providing clear evidence of just how important it is," he said, "and having been given numerous assurances from government, this is a really heavy blow for our members."

Wright added that the stealthy nature of the announcement by government will leave the plans of many communities that have already had to rework financial models and schedules each time the government moved the goalposts, in tatters.