Brexit hindering renewable energy sector
Brexit is generating inertia and squeezing the growth of the renewable energy sector, according to Rachel Nutt, Tax Partner and head of Renewable Sustainable Energy at business advisors’ MHA MacIntyre Hudson.
Nutt believes Brexit is creating a challenging and uncertain time for renewable businesses. “Brexit, and the resulting lack of announcements about future subsidies which have to date supported much of the sector, is causing a period of inertia and stalling many new projects. It is creating a very challenging and uncertain time for renewable and sustainable energy businesses”, she said in a press release.
British Prime Minister Theresa May has recently sent the letter triggering Article 50, starting the two year countdown that will end with the UK leaving the European Union. The triggering of Brexit came nine months after the referendum in Britain on the country’s future in the EU. Despite the process having started, a great deal of uncertainty surrounds how Britain will look after leaving the EU, and this confusion extends to the future of the renewables sector.
“Everyone is assured there is a huge power demand for the future, lack of grid capacity, and a need to hit green energy targets; however, the lack of clarity on funding has caused a significant slowdown in the market. Even with the advent of more innovative battery storage capacity and falling panel prices, the sector needs a new subsidy announcement to gain serious momentum in the areas of on shore wind and solar”, said Nutt.
“The industry is also facing a number of other challenges around new tax law. The new Transactions in Land legislation could result in many large scale projects being subject to the higher tax charge of income tax rather than Capital Gains Tax.
“The future demand for grid capacity is also likely to be a major challenge. The push into electric vehicles, and lack of capacity on the grid in the areas where it is most needed, is likely to be a real practical barrier to growth without significant investment. These pressures are ironic when we are seeing more high street funders, late to catch up to the market, finally keen to lend.”