Chancellor Urged to Drop the Solar Tax Hike

Key measures the solar industry is looking out for in the Spring Budget tomorrow:

1. Exempt Microgeneration and Rooftop Cells and Solar from Business Rates

The STA delivered a 200,000+ petition with Greenpeace to the Chancellor last week asking him to drop the business rate hike for self-consumption of rooftop solar power. The STA has been pressing the Government for over nine months to drop the business rate hike for rooftop solar power, with widespread support including from the Shadow Chancellor, the Federation for Small Businesses and major UK NGOs. The STA knows of no other sector facing such an extreme rate rise of up to 800%. Solar is being taxed under Plant and Machinery at levels which do not accurately reflect installation costs today and which do not reflect increased property rental values.

There are around 44,000 microgenerators in the UK who currently pay no business rates on their solar and who face a nasty shock with the rate rise, which could constitute a significant proportion of their overall rate rises.

The rate rises come when rooftop solar deployment is at a near six year low, further threatening the industry. The STA has met with key Ministers including the Financial Secretary Jane Ellison and Local Government Minister Marcus Jones. We are looking for a decision tomorrow.

2. Commitment to Recycle Underutilised FIT Budget

As part of the FIT consultation process in December 2015, there was a commitment to review deployment & the potential to recycle underspend. Solar has seen an 85% drop in deployment compared to this time last year. Commercial rooftops have been excessively constrained preventing a meaningful market. The STA has set out how FITs should be reformed in detail, including the removal of needless red tape, which would cost nothing.

3. Extend the Carbon Floor Price beyond 2020

Investors now lack a clear, long term signal for low carbon power investment. The Chancellor announced in the Autumn Statement that the Carbon Floor Price, which has helped to deter coal generation, will remain at £18 t/CO2 until 2020. Investors are looking for post 2020 signals as analysis suggests the investment pipeline has slowed considerably due to policy uncertainty. It is not yet known how the UK will engage with the EU ETS post Brexit. Recent OECD analysis suggests 30 euros is an appropriate price today for the env and social costs of carbon.

4. Competitive Access to LCF Funding

Large scale solar has been prevented from competing with other technologies for support under the LCF since the abandonment of auctioning for 'established' technologies by the Conservative Government, following Manifesto commitments not to support onshore wind. As a result, all of the cheapest renewables have been cut out of the energy market, increasing the costs of decarbonisation for consumers.

The Treasury will make a statement on the future of the LCF tomorrow, according to Bloomberg. It is not known whether this statement will seek to reform shortcomings in the LCF accounting methodology, or whether it will announce further LCF funds post 2020. The STA is seeking an early solution that enables solar power – the UK's most popular energy source – to access the wholesale market again. Solar power was responsible for only 6% of the LCF overspend according to National Audit Office analysis, yet it has borne the brunt of damaging policy changes.

5. Enhanced Capital Allowances for Solar

?The industry is looking for a level playing field with some fossil technologies that enjoy 100% first year capital allowances. Renewable heat is also eligible for ECAs. The STA wants to see ECAs extended to solar and storage.

6. Smart Infrastructure

Smart Power could save the UK economy up to £8billion per annum by 2030, boosting UK competitiveness. The STA will welcome any measures that expedite the transition to a smart energy system. This includes a wholesale review of network charging and rapid opening of markets for power storage. STA welcomes support for EVs, but these also require smart local power infrastructure.

7. Remove VAT threat to domestic solar

The industry is still awaiting a definitive statement to confirm the domestic solar VAT will remain at 5%. STA is also seeking clarity on the VAT treatment of storage.


For further information or to request an interview, please contact:

Name: Leonie Greene
Title: Head of External Affairs
Tel: 0203 637 2945

Background on the Solar Trade Association:

The mission of the Solar Trade Association is to empower the UK solar transformation. We are paving the way for solar to deliver the maximum possible share of UK energy by 2030 by enabling a bigger and better solar industry. We represent both solar heat and power, and have a proven track record of winning breakthroughs for solar PV and solar thermal.