The Valuation Office Agency (VOA) is calling on the sector to engage with the development of business rates that will be applied to energy storage projects in 2022, including those attached to subsidy-free solar farms.
The division of Her Majesty’s Revenue & Customs (HMRC) is currently investigating how to apply new rates to the revenues accrued by energy storage technologies, including standalone and co-located projects with all generation technologies, Solar Power Portal has learned.
Following last year’s widely reported and controversial review, which saw a ‘solar tax hike’ of six to eight times the previous levels applied to existing solar installations, the VOA is now casting its eye towards energy storage, which currently are not included in the business rating list at all.
The new rates to be applied to storage for the first time are likely to impact subsidy-free solar farms currently being developed.
Historically, business rates have been applied to the subsidy payments made to solar projects under the Renewable Obligation and feed-in tariff schemes. However, with the UK moving to a subsidy free environment, these are likely to be applied only to the generation capacity of the solar park that it exports to national or distribution grids.
With many of these projects planning to use battery storage to build a subsidy-free business case, the VOA is seeking out where new battery projects are being planned or built and if they are co-located with solar farms.
Using technology and revenue values in 2020, two years before the next review as set in legislation, rateable values could be applied in two ways to these projects. The VOA is considering the use of a capital expenditure or contractors’ revaluation, taking into account a range of initial project costs to form an annual equivalent of business rates applied to revenues.
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