Average rates for businesses which generate and consume
electricity from their own rooftop solar panels are set to
substantially increase under the draft rateable values, published
by the Valuation Office Agency (VOA) (https://www.gov.uk/correct-your-business-rates)
In some instances, business rates could soar from around
£400 to £2,700 a year, based on a typical 100kW rooftop
installation, causing dismay in the solar industry and across the
wider green economy.
Existing legislation has resulted in complex VOA
classifications, meaning that owners of solar panels are divided
into two classes: one for where electricity generation is intended
"mainly for export" (either to the grid or via a Power
Purchase Agreement) and the other where it is "mainly for
self-consumption". Under the new rateable values it is
proposed that in some cases businesses that own their roof top
solar panels and use most of the electricity themselves –
which is likely to affect many public sector generators –
could experience up to an eight fold increase in their
The current situation for solar rooftops could lead to two
identical installations potentially paying very different rates
depending on who owns the solar panels. For example, an
organisation that generates and consumes electricity from their own
rooftop solar panels will pay substantially higher rates when
compared to an organisation that is consuming electricity generated
by a third party through a Power Purchase Agreement. A similar
scenario arose some years ago on Combined Heat and Power (CHP) and
the government took legislative action to rectify the position. The
Solar Trade Association (STA) is currently lobbying for secondary
legislation to apply to similar exceptions as have been enacted for
The good news is that the STA has signed a Memorandum of
Agreement for fair treatment of "mainly for export"
generators to ensure the rateable values reflect falling
installation and capital costs, and lower subsidy rates. This means
that most solar systems exporting to the grid or via a Power
Purchase Agreement will see a decrease in business rates.
Whilst business rates are devolved in Scotland, it is widely
believed that the Scottish Valuation Office is likely to follow its
counterpart south of the border.
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