My children’s primary school, which wants to install solar panels. You can’t fault the plan. School hours coincide with sunlight, the building has ample roof space, self-generated power reduces running costs and renewable energy is green and clean. It’s so obvious that only five years ago the government was running a “power to the pupils” campaign for solar in schools. But, as with every capital project, the decision comes down to costs. Three years ago, another school in my area spent £36,000 on solar installation. In 2014, when the Department for Energy and Climate Change was pushing the school campaign, it could have expected to earn about £4,100 a year – on top of energy savings – under the feed-in-tariff system introduced by the Coalition in 2010. The Treasury had a different agenda, though. In 2016, it scrapped an exemption on business rates that raised the levy on solar investment eightfold and ended the feed-in-tariff scheme in April this year. The cost of solar panels may have dropped, but the government, not schools or companies, has grabbed the gains. The problem with business rates is that they punish investment. Putting solar panels on a roof increases a school’s rateable value, a rental equivalence measure used to calculate the business rate bill. A £36,000 investment might increase rateable value by £3,600. At 50.4 per cent, business rates in this case would add £1,800 a year to the school’s tax bill. Remarkably, within a decade, the panels would have cost half as much again in tax. A separate allowance regime lets companies offset outlay on energy-saving technologies against profits to reduce their tax bills, but, as state schools don’t make profits, they don’t benefit.
Times 5th Nov 2019 read more »