EU VAT Ruling

[The Solar King]

Don't get over excited. I suspect this has a long way to run yet. Change in Government may actually be helpful in telling those in Brussels they are not agreed with.

Domestic solar facing 15% VAT hike following EU ruling | Solar Power Portal

If it goes through it would put £800.00 - £900.00 on a domestic install. Not good.

 

[Worcester]

That also of course potentially impacts all of our other work, - Biomass, Air and Ground Source Heat pumps etc. it will have a big impact on retrofit.

PV with it's overvalued FiT rates will still carry on, other technologies, - Air Source Heat Pumps, Solar Thermal, Biomass, it may the the final nail in the coffin for them..

New build of course is zero rated, and so are long term voids that are refurbished, so that market will staill carry on, and ASHP's and PV will still carry on there, especially with the current and on-going energy improvements required by the building regs.

 

[TedM]

The logic would have to be that if the costs go up then the tariffs (both FIT and RHI) would have to go up as well to compensate although I think DECC might argue otherwise. The tariffs are, after all, supposedly set to incentivise a certain level of take-up and to meet the "hurdle rate".

 

[Worcester]

@TedM that's the logic, and you could argue in one pocket, out the other, so no net effect on the end user IF the rates are increased.

FiT and RHI budgets are set until 2016, and I am actually not expecting the Dom RHI to be renewed beyond April 2016 as other legislation will enable the governement to achieve it's targets, and therefore using the same logic, they will also see no reason to increase the FiT rates, i.e they'll tout that their policies over the last 5 years (2016) to have been so succesful that no support is needed.

Ms Rudd also vowed to keeing energy prices down will not want to be seen to be spending on 'expensive' renewables.

We will continue to take action to protect the environment as part of our long-term economic plan for green jobs and growth. However, we will do it in a way that represents the lowest possible cost to consumers - through bearing down on the costs of green energy, driving greater innovation and working with business to deliver solutions.”

She's a strong advocate of nuclear which will give here cheap "non-brown" energy.

Why would they argue now continue to argue the case? They need as much revenue as they can get anyway, and they can take the ££ and blame it on the EU.. After all they'd need an 80% drop in installations to be worse off.

I would be very suprised to hear of any tariff increases, we can hope though!


For the grammerists amonsgt you the word "however" is the polite form of 'but' and it negates the phrase that has gone before it.

 

[Gavin A]

That 5% rating is also a pretty big driver behind people getting an MCS company vs DIY.

I'd be up for challenging it on the basis of illegal state aid for the fossil fuel industry if they go through with this, as it'd mean renewable energy was 20% rated vs 5% for gas / fossil fuel electricity.

 

[The Solar King]

I am hopeful it will be appealed, which would take another couple of years, in which time there could be a further change in the law at EU level to legalise the UK position.

Whatever one may think of Amber Rudd, she has made some very positive noises about solar. By this time next week solar could be very unpopular with wind. Any cut in support for wind could mean either no further cuts for solar or an increase to better support commercial rooftop development. The solar industry has long argued for a fairer share of the Levy Control Framework, and this may see it happen.

The Solar Trade association are launching a new strategy on Monday called 'The Solar Independence Plan for the Britain', which maps out how the industry can move to zero subsidy by 2020 given the correct support in the period until then. I will upload a copy as soon as it is in the public domain. As it is a strategy to move to zero subsidy in an orderly and sustained manner, it should go down well with our political masters.

I wouldn't be too gloomy.

 

[Worcester]

"very positive noises"

We can all make noise, ACTION speaks loader than words, lets see it.


"an increase to better support commercial rooftop development"

Seen this? DECC rubber stamps ?lift and shift? solar rooftop proposals | Solar Power Portal

 

[The Solar King]

Yup, we had been pushing for this for a considerable period. Would have been good to have an earlier deployment than 2019, but in reality this should work. If you know you are planning to relocate in two years time, PV on your roof is unlikley to be top of your priorities.This is one of a number of issues identified as constraining commercial rooftop development.

Another proposal in the strategy will be to split the current 250Kw-5Mw band with a lower band of 250kw-1Mw at £0.08 with that above at the existing £0.0616 to drive deployment in this important sector.

Also looking for removal of EPC D requirement as this was only introduced as a financial constraint which is now affecting deployment.

What action Amber Rudd takes remains to be seen but these were her comments:
Amber Rudd promises to ?unleash a new solar revolution? | Solar Power Portal

 

[Worcester]

That's all why I reckon they won't bother to fight the VAT ruling, they'll say "Look what we've done" . I 'd like to be proved wrong

VAT has no impact on that sector .....

 

[The Solar King]

That 5% rating is also a pretty big driver behind people getting an MCS company vs DIY.

I'd be up for challenging it on the basis of illegal state aid for the fossil fuel industry if they go through with this, as it'd mean renewable energy was 20% rated vs 5% for gas / fossil fuel electricity.

Very valid point Gavin, and thanks for raising it.
I have worked up this argument in terms of consumer protection and it will be raised and emphasised at a meeting with DECC today. (VAT not originally on the agenda). If this starts going the rounds, remember it started with Gavin.

As Gordon says its about action, so this was mine for today.

 

[Worcester]

Appreciate your efforts with DECC and the time you put into it, thx

 

[The Solar King]

Snippet from today's STA Newsletter:

"In a case that has been running since June 2012, the European Court of Justice ruled against the UK’s 5% VAT rate for domestic energy-saving materials, including solar PV and thermal. The ECJ ruled that the reduced rate fails to comply with the EU’s VAT directive, which states that such reduced rate should only apply to social housing or to services supplied as part of a social policy. The Telegraph reports a government spokesman saying that “the Government will study the judgement carefully and consider next steps”, but also that the government is committed to the Conservative manifesto pledge not to raise taxes including VAT. If implemented this ruling is clearly a major further blow to our industry, potentially adding over £900 to a typical 4kW domestic PV install and increasing the danger that homeowners will seek cheaper, riskier DIY solutions. It also undermines other measures financed under the Green Deal. We are in urgent discussions with DECC to support the Government resisting this ruling and will keep members appraised of progress. Solar Power Portal reports the government as stating that no one who has already pre-ordered or pre-paid for energy-saving materials at the reduced VAT rate would be affected as a result of the ruling, i.e. the implementation date will be when/if the ruling is transposed into UK legislation, likely to be next year at the earliest."

Hope this last point clarifies things. We have everything to fight for, and we will.

 

[TedM]

It is probably an education to read the text of the ECJ ruling in this case:

CURIA - Documents

 

[Worcester]

@TedM, you're the expert in these matters

Does this mean that a split / two invoices could be issued. One for the supply of materials at full rate and one for the installation services at reduced rate. Who is to say how those would be split, and maybe its; just the Inverter and Panels at full rate as the other materials are now incidental, and so long as materials not sold at a a loss to the client... Maybe even sold by another division / company organisation, - effectively client buys direct. Our services then include for validation of MCS and G83 certification(s)
Just some thoughts..

 

[The Solar King]

I don't know about it being an education, but you very quickly loose the will to live reading it.

Should they so choose, the UK Govt could play cat and mouse with this for years. It would appear that by changing the wording and definition of objectives in UK VAT legislation could make it all OK. No doubt it would again be challenged.

It strikes me that there are too many Eurocrats with too much time on their hands. Many other member states would simply tell them to eff off and ignore it, which they do on loads of other issues. So much for the UK sense of fair paly and sticking to the rules.