Wind and solar farms to face stealth tax raid through business rates

JEREMY HUNT is to hammer wind and solar farms with a stealth business rates tax raid, dealing a “double whammy” to the green energy sector already facing a new windfall levy.

The Chancellor’s revaluation of business rates will add tens of millions of pounds to the bills of the renewable power generators, according to expert analysis, in a move that will boost Treasury coffers but potentially harm investment. And it comes as green energy producers are already bracing for a £14bn windfall tax that will take effect from 2023 and last for five years.

Separately, the regulator Ofgem was revealed to have handed tens of millions of pounds to consultants for their advice on emergency schemes during the energy crisis.

Energy giants including Scottish Power and SSE have warned that Mr Hunt’s raid risks deterring investment, with renewable power groups saying that the rise in business rates will only make the situation worse.

In a meeting with energy company bosses on Friday, it is understood Treasury officials faced questions and complaints about the exclusion of gas-fired power plants from the windfall tax.

And, under the revaluation announced in Mr Hunt’s Autumn Statement, gas plants’ business rates bills will also fall over the next three years. In stark contrast, wind farms’ rateable values will rise by an average of 45pc, while solar farms will rise by 37pc, according to analysis by property consultant Gerald Eve.

The changes reflect the growing value of the land, as a surge in electric- ity prices since Russia’s invasion of Ukraine and the rising value of green power facilities bolsters renewable energy producers.

However, smaller wind and solar farm owners will be hit the hardest, with some having their bills double in just three years.

For example, a typical sven megawatt wind farm with fewer than 10 turbines stands to have its annual bill rise from £40,000 to £80,000 by 2025-26, Gerald Eve said.

Dan McGrail, chief executive of RenewableUK, warned that the rise in business rates on top of a windfall tax would deal a major blow to green power investment “when we should be going all out for renewables”. He said: “To solve the energy crisis and bring down consumer bills, we need to invest tens of billions of pounds in new wind and solar capacity.

“The kind of eye-watering increase in business rates suggested risks slowing progress on the shift to cheap, homegrown energy.”

Chris Hewitt, chief executive of Solar Energy UK, called on ministers to take into account the windfall tax’s financial impact when setting business rates for the next three years.

He added: “We feel the current economic circumstances need to be taken into account when we are looking at any tax changes.”

Solar Energy UK on Friday branded the Government’s windfall tax “perverse”.

According to Gerald Eve, the rise in business rates will also cost wind and solar farms in England at least £60m more over the course of three years.

Simon Green, head of business rates at the consultancy, said the higher rates reflected soaring electricity prices as well as the subsidies generators receive. The revaluation will be based on 2021 rateable values and is the first carried out since 2017.

Mr Green said at present this meant the rateable values would not take the impact of the windfall tax into account.

“It could result in a double whammy for renewable generators,” he added.