Sunday, 24 November 2019

Threat to Solar

The current government have removed most of the incentives for installing your own renewable electricity generators and in addition have increased the tax on new installations. This goes against all of their talk of tackling climate change. Under their watch micro wind generation has all but stopped and there is a risk solar will go the same way. Each roof top solar installation saves an average of 26 tons of CO2 emissions over its lifetime and if installed on the roofs of all new homes, would make a significant impact on our countries carbon footprint.

The tax rate on domestic coal is 5% The tax rate on domestic solar has been raised to 20%

The then environment secretary, Michael Gove, agreed that there was a climate emergency, but said he did not like the idea of declaring one. Telegraph

In April this year the MCS feed in tariff ended. The feed in tariff was intended as a reducing payment that would encourage solar installations while reducing year-on-year as the price of installation dropped due to economies of scale.

Payments were set by OFGEN each year with the payment having two elements, one payment was based on generation (the total electricity produced weather used or exported to the national grid) and a second payment for the amount exported.

Due to the lack of smart metering at the time the scheme started, the amount exported was deemed to be half of that generated. The amount paid was an index linked rate set yearly by OFGEN.

You could argue that it had done its job. Solar installation prices had come down to such an extent that they could payback their initial investment within a reasonable period of time without the need for incentives.

However, solar installations of a size suitable for most homes will produce more than they require at certain times of the year. At this point, the excess generated electricity is fed into the grid.

The government failed to provide a replacement for the feed in tariff, so it is currently up to your electricity provider to set a value on the electricity you supply them.

It is planned to set a minimum rate in January, but smaller electricity providers are exempt and the rate is likely to be considerably lower than the amount we pay to receive electricity into our homes.

Secondly, until October this year, solar panels had a VAT rate of 5%. The same rate as domestic fuel like gas, oil or coal. This has now been raised to 20%. This one piece of legislation will probably put an end to solar installations in the UK

This legislation was passed on 25 June 2019, the same day the UK House of Commons passed legislation to commit the UK to net-zero carbon emissions by 2050.

The rate increase was claimed to bring us in to line with EU rule, however this does not seem to be the case. The lower rate of VAT on solar had been discussed in 2016 and was deemed to meet EU tax rules at that point. Nothing has changed and yet here we are.

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