Juliet Davenport, Good Energy: We must tell the government to stop the solar VAT hike. Good Energy argues the government’s solar tax proposals urgently need a rethink. Another government consultation has ended on increasing VAT on low-carbon technologies, including domestic solar panels, biomass boilers, and battery storage. Consumers are facing a five per cent to 20 per cent hike in costs to climate change solutions we can use today. Meanwhile, domestic coal, the highly carbon intensive fuel the UK is committed to eradicating from our energy system, will continue to enjoy the lower five per cent rate. We were here in 2016 when a similar tax hike was proposed and eventually dropped thanks to industry and cross-party opposition. Fast forward three years and we are back in the same place, albeit with a few changes. Could there be a more contradictory step from a government which notably failed to stop the Commons declaring a climate emergency? The increase is certain to hit innovation and investment in the UK’s growing solar and battery storage market. But it stacks up with similar moves to undermine small scale renewable generation: closing the Feed-in Tariff, complicating network charging rates, and making clean power pay a climate change tax.
Business Green 20th May 2019 read more »
Labour is right: Britain’s private utility model is broken. Here is a riddle that is not so difficult to unpick. Between their privatisation in 1989 and last year, English water companies were permitted by their regulator to generate operating cash flows totalling £159bn in 2017-18 money; easily more than the £123bn they spent on fixed assets such as new pipes and infrastructure. Yet at the end of this same period they had somehow built up £51bn in debt (from zero at privatisation); a staggering sum that customers will have to service and pay off over many years. How come? Embedded in the answer is the reason why private monopolies such as water and energy distribution networks have become so controversial, and why the Labour party’s attempt to nationalise them cannot be dismissed as a paleo-socialist blast from the past. The answer is private investment returns. On top of all the money they invested in their businesses, those water companies paid out £56bn in dividends, and debt interest costs on their growing pile of borrowings. Electricity companies have been no slouches too, with listed transmission system owner National Grid delivering total returns of 12 per cent annually since privatisation. Dividends are usually seen as a return for equity investors bearing risk, but the risk in these natural monopolies was minimal. Not only do customers have to buy the product; the regulator also has a duty not simply to set prices to protect the public but also to ensure the businesses are financeable. That in turn is why they were able to borrow so much. Indeed this created a vicious spiral that sucked in financial engineers whose main objective was draining value from these firms.
FT 19th May 2019 read more »