Why don’t energy-generating renewable technologies qualify for Enhanced Capital Allowances?

The new Feed-In Tariff (FIT) for energy generating technologies was launched in April this year.  The Renewable Heat Incentive is due to start in April 2011.  For both, generators will be paid for every kilowatt hour of energy (electricity or heat) that they produce.  So called 'energy reducing' technologies including solar hot water and biomass are elegible for Enhanced Capital Allowances – business tax rebates that makie them a viable investment option for those looking for long term returns.  But energy generating technologies are excluded from this tax benefit – meaning that those with a long-term view of investments (25 years in the case of photovoltaics) will not invest.  They can earn as much if they put the money in the bank and leave it there.  Domestic generators benefit from a tax-free FIT so they are okay.  Why are the energy-generating technologies being disadvantaged.  I work for a photovoltaics company and we are seeing a huge increase in interest in the technology which is potentially good news for carbon reduction.  But not if investors turn away due to the lack of ECAs.  This is a typical example of the lack of 'joined up thinking' within government departments – in this case, HMRC, DECC and the Treasury.  Please do something about it!

Why is this idea important?

The new Feed-In Tariff (FIT) for energy generating technologies was launched in April this year.  The Renewable Heat Incentive is due to start in April 2011.  For both, generators will be paid for every kilowatt hour of energy (electricity or heat) that they produce.  So called 'energy reducing' technologies including solar hot water and biomass are elegible for Enhanced Capital Allowances – business tax rebates that makie them a viable investment option for those looking for long term returns.  But energy generating technologies are excluded from this tax benefit – meaning that those with a long-term view of investments (25 years in the case of photovoltaics) will not invest.  They can earn as much if they put the money in the bank and leave it there.  Domestic generators benefit from a tax-free FIT so they are okay.  Why are the energy-generating technologies being disadvantaged.  I work for a photovoltaics company and we are seeing a huge increase in interest in the technology which is potentially good news for carbon reduction.  But not if investors turn away due to the lack of ECAs.  This is a typical example of the lack of 'joined up thinking' within government departments – in this case, HMRC, DECC and the Treasury.  Please do something about it!