Solar Energy & The UK Market

Written by 5:46 am solar

Solar Energy & The UK Market

For anyone who has been watching the news recently, it would appear as though the UK’s energy policy is in a state of disrepair. With the cost of gas and electricity continuing to rise and warring politicians seemingly at odds on how to reverse this trend, there is little indication as to which direction the industry will take in the months ahead.

The challenges facing the energy sector are particularly complex, as there are issues far beyond the bottom line cost of gas and electricity. The well-being of the natural environment is also an influential factor, for example, as consumers are increasingly driven by ecological awareness and a desire to effect change in addition to the careful management of their personal finances.

Why Solar Energy May Help To Resolve The Energy Crisis In The UK

With this in mind, it is fair to surmise that solar energy may help to resolve the prevailing energy crisis in the UK. While the initial cost of installing solar panels is typically more prohibitive than the delivery of standard energy types such as gas and electricity, the existing government has introduced a host of initiatives to reduce this and offer a financial incentives to consumers. In addition to this, existing home-owners who have already installed solar panels may soon be able to benefit from a recent ruling in the European Court.

After prolonged and challenging litigation, the European Union Court of Justice recently ruled that an Austrian home-owners was eligible to claim back VAT (Value Added Tax) on the solar panels that had been installed in his home. This represented a landmark ruling, as home-owners throughout Europe and here in the UK will now have an opportunity to pursue a similar course and reclaim thousands of pounds on domestic solar panels. While this is good news for consumers and may offer a viable alternative to traditional energy resources, however, it is not known how the British government will react.

Although the government have been keen to encourage the implementation of solar power, the new ruling could force them to refund a staggering £150 million to more than 250,000 UK households. This is more than the delicately balanced economy can bear, especially as the newly introduced Green Deal initiative is already absorbing a huge amount of public capital. There is also the underlying issue of an on-going conflict between the EU and the UK on sustainable energy, with the former attempting to coerce the latter into raising its reduced VAT rate on solar equipment from 5% to 20%.

The Last Word In Solar Energy & The UK Market

While there is little doubt that the British energy sector is fast approaching a crossroads, the future course of the market remains uncertain. Although solar power has long been championed as the ideal alternative to traditional energy sources such as gas and electricity, even initiatives such as the Green Deal have been unable to offset the relatively prohibitive cost of installation. Similarly, wider economic pressures are also forcing consumers to neglect the long-term financial savings that can be accessed through solar power.

The recent EU ruling on VAT for domestic solar panels may change this, however, as home-owners who have already embraced the concept will be eligible for a significant repayment. In addition to this, the government will need to tailor the existing taxation laws to benefit home-owners who choose to install solar panels going forward, while also raising the reduced VAT rate to comply with European legislation. This could well have a significant impact in the energy sector, and inadvertently resolve the crisis facing consumers and politicians alike.

Last modified: July 18, 2020
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