These changes were announced during the third reading of the finance bill last week and came about completely unexpectedly. No longer will investors in community energy projects be able to benefit from Enterprise Investment Schemes, or the Social Investment Tax Relief as well as other schemes. This in turn makes the investments less attractive due to the sudden decrease in monetary benefit.Earlier this year the Government announced subsidy cuts for domestic solar installations, also known as the feed in tariffs, by up to 87%.
The CEE carried out a survey during October with participation from 80 community energy groups - over 11,000 people were questioned. This survery revealed that 90% of the groups admitted their projects would struggle in the face of the proposed cuts. It is estimated that this change in the plans will lead to the loss of 27,000 jobs, not including the 1,000 already predicted as other solar energy businesses are closing down.
Solar was close to the point where it would be classed as subsidy free, and currently only adds £6 a year to a consumer's bill. Greenpeace energy campaigner Barbara Stoll accused the Government of making a "political choice, not an economic necessity".
Companies currently producing solar energy have blamed the planned subsidy cuts as the reason for their closure . They have caused uncertainty, however it could end up being a short-term issue as future announcements concerning a 'reset' will help to restore investors faith in renewable power.
The changes will come into force from 30 November this year. Financial secretary to the Treasury Dave Gauke has claimed that it will avoid the 'misuse' of the tax break by venture capital schemes. It was announced as part of the summer budget as the Government claimed to monitor the use of venture capital schemes by community energy to ensure that the schemes have not been abused, and ensuring they provide value for the tax payer.
As the energy sector continues to be brought into the limelight it serves as a reminder that it is just as important as ever to keep on top of your energy spend, and make sure your home and your business is continuing to be as energy efficient as possible. You'll thank yourself when the next bill arrives on your doorstep.
Always compare energy with an impartial expert, such as the Energy Advice Line, to make sure that the advice you are given is truly unbiased and completely reliable. Find out more at energyadviceline.org.uk.