UK proposals to increase tax on low-carbon technologies such as battery storage— announced as Britain had its first week without using electricity from burning coal since the 1880s— have come under fire from the renewables industry.
The surprise bid to increase value added tax (VAT) rates on a range of technologies, also including solar and biomass boilers, was made during a consultation launched by the government’s tax collector HM Revenue and Customs (HMRC).
The HMRC consultation, which closed on 3 May 2019, proposed that consumers wanting to install certain domestic ‘energy saving materials’ would face a tax hike from 5% to 20%.
According to national trade body the Renewable Energy Association (REA), the proposals would see coal, which is sold as a fuel for domestic use, get a reduced VAT rate of 5%— the rate that most household solar PV, biomass boiler and battery storage (when fitted alongside solar PV) installations previously benefitted from.
The REA said the proposals risked putting the UK market at a “strategic disadvantage for attracting investment and transitioning its energy system— despite falling costs of solar and lithium-ion battery storage units”. “This negative proposal for the small-scale renewable power sector follows hot on the heels of the withdrawal of other key support schemes such as the Feed-in-Tariff.”
REA policy chief Frank Gordon (pictured) said: “This change risks setting back the UK decarbonisation of homes and businesses in the UK by a number of years.”
The REA is now pushing for the proposals to be reconsidered.
The proposals came as the National Grid Electricity System Operator said Britain achieved a coal-free week in terms of power generation in the first days of May. Ironically, Prime Minister Theresa May tweeted that the achievement was down to government investment in renewable energy.
Earlier this year, the UK’s Department of Business launched a competition offering up to £20 million (US$26.2m) for “innovative, replicable solutions that could provide a market competitive alternative to conventional commercial large-scale energy storage technologies”.