The 2017 business rates revaluation has raised the issue of energy efficiency and solar energy’s viability. Under the new system, rates exemptions will be removed from smaller, non-domestic rooftop solar panel installations, while larger systems could face an increase of around 600% to 800% in their business rates.
This comes at a time when issues of environmental compliance, energy efficiency and social responsibility are prominent and, in many cases, businesses are positively adopting them.
“The working environment and the wider environment of the natural world overlap,” explains Don Beattie, Senior Partner at The Beattie Partnership. “Each has an impact on the other, and environmental compliance is a growing issue for commercial property.”
“The proposed solar hike threatens to derail many energy-efficiency initiatives by appearing to penalise those who take them on board,” Don continues.
The Solar Hike
“The Valuation Office Agency uses one of two methods in assessing your solar rooftop panels,” Don explains. “Either they’re mainly for export, or for self-consumption.”
For the self-consumption assessment, the energy exported to others, such as tenants or back into the grid, is under 50%. If this is then the case, it can mean much higher business rates.
“In this situation, the VOA deems that the building’s owner is benefitting from the electricity generated by solar panels, making them an addition to the value of the entire building,” explains Don.
Resolving Energy Efficiency Issues
“The business case for energy efficiency is clear, and in many instances, a matter of compliance with regulations,” Don points out. “You want to be able to run your property efficiently, while minimising your impact on the environment and, wherever possible, reducing your energy costs.”
What the government’s solar hike does is raise questions about the viability of certain energy-saving measures for many businesses and property owners.
“It feels like a catch, where on one hand, businesses are encouraged to be energy efficient, and on the other this might cost them considerably when it comes to their rates”
“My advice is for businesses to look at the bigger picture, in terms of their accommodation, their business rating assessment, and both their energy needs and consumption,” Don concludes. “It may be a case of enhancing efficiencies in one area to compensate for expenditure in another.”