commercial property lambert smith hampton

Viewpoint - 21/06/2011

Renewable energy policy needs clarification

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The government has announced that local authorities will be authorised to keep control of 100% of the business rates generated from renewable energy projects. This raises the question: What exactly is a renewable energy project?

Devil in the detail: only energy-generating components qualify

Those local authorities now excitedly considering the construction of wind farms, biomass conversion schemes or geothermal heat and power plants, need to take a moment to consider that the devil of this particular policy undoubtedly lies in the detail.

Reading between the lines, it becomes clear that “it is only the energy-generating components of those projects that constitute the qualifying technology”. In other words, the entire renewable energy plant infrastructure is unlikely to qualify, and nuclear appears to have been ruled out in its entirety. It will fall to the government’s Valuation Office Agency (VOA), and the local valuation officer, to determine the business rate levy attributable to the “renewable energy element of the plant”.

Clarification on renewable energy is required 

When you consider that some components of process machinery are already exempt from rates under the existing Plant and Machinery Order, a clarification is required, particularly in regard to the term renewable energy element. Once again, an already stretched and financially constrained VOA is likely to be asked to become expert in the moveable feast that is renewable energy plant technology. In the end, local authorities may not benefit as much from the policy as the headlines suggest.

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