UK can raise VAT by 15% on components for domestic SPPs

Her Majesty's Revenue and Customs (HMRC) proposes to increase the value-added tax rate applicable to “energy-saving materials”, which include components for solar installations, battery energy storage systems and other clean energy technologies widely used in the residential sector.

Today, a reduced VAT rate of 5% is applied to home installations, but after the European Court ruled that the discounted VAT rates in the UK are applied too widely, the HMRC suggested raising the rate on some systems to 20%.

Such an increase in tariffs will not affect citizens over 60 years old, as well as buildings “used exclusively for certain categories of the population”, in other words, the most socially vulnerable people in the country. Also, higher rates will not be applied to systems where the cost of components is less than 60% of installation costs.

Since April 1, the UK government has curtailed the program of “green” tariffs. Green tariffs were established in 2010, the rate was 0.414 pounds per kWh. The rate gradually decreased and in 2019 reached 0.0379 pounds per kWh. The payback period for home SPPs in the UK was 11 years, after the abolition of “green” tariffs – 17 years.

Recall that a draft law to change the support system for renewable energy was considered – switching from the “green” tariff to auctions on April 25 in the Verkhovna Rada.The draft law was adopted with an amendment that provides that household solar power plants with a capacity of up to 50 kW (now in law the maximum household SPPs with a “green” tariff can have a capacity of 30 kW) to obtain a “green” tariff should be located exclusively on the roofs or facades of capital structures.

“The prohibition of the installation of home ground stations in practice will lead to the fact that few Ukrainians will be able to install a SPP more than 10 kW, as an object of greater capacity will not fit on the roofs”.

Source: elektrovesti

Tags: renewable energy, solar energy, electricity, EU

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