Later today, the government will announce the details of its Spending Review and Autumn Statement in a combined statement to Parliament. We take a look at the hopes and expectations expressed by the solar industry.
Provide clarity on RHI funding
The UK is far short of its domestic targets on renewable heat, and energy secretary Amber Rudd has indicated she is looking to boost its the deployment. The solar thermal hot water heating market has collapsed in Britain as a result of insufficient or ineffective support under the RHI, which is funded out of general taxation and not the Levy Control Framework, and has been told to expect an announcement in the Spending Review. The Solar Trade Association (STA) is hoping for clarity on future funding for the RHI and would support any further effective initiatives.
Drive investment with tax incentives
If the government proceeds with its proposed changes regarding the Feed-in Tariff and the Renewables Obligation, the STA said the extreme cuts to tariffs and maximum deployment caps planned for solar PV will damage the economics of business investment in the sector. 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 taxation. The STA has submitted a response to the consultation and is pressing for taxation based on accurate carbon reporting as a minimum.
Extend ISAs to debt-based investment instruments
With the removal of Enterprise Investment Scheme and Social Investment Tax Relief for community energy, the STA is keen to see the Treasury confirm that debt-based investment instruments such as debentures can be rolled into ISAs from next April. This will enable crowdfunders and communities to benefit from tax relief from ISA investment in local solar projects and this may help restore project economics in due course, while also benefiting local people.
Create a level taxation playing field
The STA is calling for the extension of 100% Enhanced Capital Allowances (ECAs) to solar power. Large-scale solar power has been left with no support as – unlike solar power – shale gas and North Sea oil operations qualify for 100% capital allowances, so development capital expenditure qualifies for immediate relief. The STA recommends ECAs of 100% in the first year for solar power.
Clarify the National Infrastructure Commission’s role
The STA is keen to get further clarity on the role of the National Infrastructure Commission. The role of the commission in energy and the split of responsibilities with the Department of Energy & Climate Change (DECC) remain unclear.
Caution on DECC budget cuts
Cuts of 30% have been agreed in the DECC settlement and 200 staff will be made redundant. Energy is a complex and urgent policy area and the STA is concerned that it is a false economy to severely cut the department at this time.
Future of the Levy Control Framework
The Autumn Statement may include some kind of announcement on the Levy Control Framework green energy budget post 2020. The current budget caps only run to 2020/21.