According to the Renewable Power Association, the UK Government is ‘sabotaging’ growth in the UK’s renewable energy industry.
New business rates set by UK Deputy Prime Minister Prescott will raise bills for green generators by up to 700%, while rates for nuclear and fossil fuel plants are set to fall dramatically.
This situation arises from the way in which business rates will be calculated from April. The formula used by the Valuation Office makes rates proportional to the receipts of each plant. In the case of renewable generators this includes the incentive payments for sustainable energy sources. Since 2002, all electricity consumers have been paying a small proportion of their bills to support renewable power. Now, the Government will effectively be taxing these incentive payments through the rating system.
Trade Associations representing the sector are exasperated by this measure. “This is another nail in the coffin of the Government’s renewable energy targets,” said Philip Wolfe of the Renewable Power Association. “We have been urging the Department of Trade and Industry, which is responsible for renewables, to work with the ODPM’s business rates department to find a sensible solution”.
Marcus Rand of the British Wind Industry Association confirms that the industry had contacted ministers in both departments. “This seems a classic case of un-joined-up Government. We will be seeing a ridiculous situation where with one hand the Government is giving financial support to renewables while with the other it is taking some of that support away”, he said.
Commenting on the situation in Scotland, Maf Smith, Chief Executive of Scottish Renewables Forum said, “this decision exposes the ‘push-me pull-you’ conflict within Government. If renewable targets for Scotland are to be met, we need consistency across Government and support instead of obstruction”.
The industry estimates that the change will inhibit development of wind power by about 33%. The effect on many other renewables technologies will even more acute, says Wolfe, predicting that new biomass energy developments would be “stopped in their tracks”.
“We have been pressing the Government for a range of positive actions needed to make their 10% target for 2010 achievable”, he said. “Instead they seem to be putting barriers in our way”.