Rooftop Solar Business Rates set to Rise

The Valuation Office Agency (VOA) has announced changes to business rates for solar PV systems and these new rates are set to come in to force in April 2017. The Solar Trade Association estimates that some businesses could face increases of up to 800% if their rooftop solar PV system provides renewable energy to their own properties.

Despite efforts to secure a governmental U-turn, it is likely that the new rates will come in to action.

What are the changes?

Business rates for solar PV systems are currently calculated at a rateable value of £8/kW regardless of the application (i.e. self-consumption or export), with systems sized below 50kW being exempt. The new rates however will look to differentiate systems based on the use of the energy and systems below 50kW will also be subject to business rates. Two valuation methodologies are proposed:

1. Mainly Export

This is where the solar asset has been set up to export the energy generated to a third-party via a Power Purchase Agreement and a Special Purpose Vehicle (for example solar farms).

2. Mainly Self-Consumption

The is where the owner of the system uses the majority of the energy generated for self-consumption.

The concern regarding the new business rate is focused on those that fall under the second valuation bracket, as the valuations are estimated to rise between 6 to 8 times.
Who will be affected by the new rates?

Any business or organisation that has a solar PV system that supplies the majority of the energy generated for self-consumption could be impacted. Examples include:
Schools
Community Buildings
Local Authority Buildings
Small Businesses
Investment funds with existing leases
Asset Managers
Hospitals
How can we help?

Wilson Fearnall can provide advice to help you understand the new business rates and how they will impact your system. Services include:
Review of existing asset and structure – sale or re-finance
Estimation of new business rates
Advice on setting up a new Special Purpose Vehicle
Advice on setting up a Power Purchase Agreement

 

 

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