Good Energy chief executive Juliet Davenport has slammed the government for tabling legislation to hike VAT rates on domestic solar and battery storage installations on the same day that Parliament is considering its 2050 net zero target.
Secondary legislation, laid today (24 June) in the House of Commons will increase VAT rates from a reduced 5 per cent to the standard 20 per cent for many home solar and battery storage installations.
The proposals apply where the cost of the materials exceeds 60 per cent of the total cost of the installation.
The increase is expected to deter households from installing biomass boilers and combined solar PV and battery storage.
By contrast, supplies of domestic coal fuel for heating will continue to enjoy the reduced 5 per cent VAT rate.
The government’s move is a response to a European Court of Justice ruling stating that VAT on energy saving materials should not have been receiving the reduced rate, in line with state aid law.
The Renewable Energy Association (REA) has called for this decision to be reviewed and for the reduced rate of VAT restored as soon as possible following EU exit.
The legislation has been laid on the same day that the adoption of net zero greenhouse gas emissions by 2050 has been timetabled for a Commons debate.
Good Energy has attracted more than 11,000 signatories for a petition calling for the increase to be reversed.
Calling for the legislation to be rescinded, Davenport said: “The proposed solar tax hike is possibly the worst way to respond to a climate emergency. The government should be seeking to be a world leader in renewable technologies, but it’s damaging our successful solar industry and putting green jobs at risk. We urge the Treasury to listen to the thousands of petitioners who want to play their part in fighting climate change.”
Dr Nina Skorupska, chief executive of the REA, said: “The VAT proposals will create a barrier to British homes and businesses who are seeking to take action on climate change and reduce their bills by installing solar with battery storage.”