Rates rise fear ‘scuppers renewables projects’

McCormack: projects on hold. Picture: Contributed
McCormack: projects on hold. Picture: Contributed
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A COMPLEX system for calculating business rates which penalises small developments such as biomass plants is jeopardising Scotland’s ambitious carbon reduction goals, it has been claimed.

Ken McCormack, head of business rates at GVA James Barr in Scotland, said many such projects have been put on hold as firms fear incurring a rates hike that can xceed £1 million.

Biomass-based generators have become popular with industries such as whisky and paper and timber milling, which can use their own by-products to produce heat and energy.

However, such plants and other smaller-scale renewable systems are assessed for rates based on construction costs, and McCormack says that because in many cases they are expensive compared with the savings they generate, high rates often make the difference between a project going ahead or not.

He said: “They are cleaning up the environment but they are being taxed heavily to do it. Some clients are spending tens of millions of pounds, and seeing a million pounds added to their rates on top of that.

“It’s become a major consideration when looking at projects before they start. Clients realise they will have to pay higher rates, but not that much more.”

McCormack suggested it would be better to assess such projects in the same way as commercial wind farms – which are rated based on the value of the power they generate.

He said that otherwise a shortfall in such projects may lead to the Scottish Government missing its 2020 environmental targets.

Holyrood has announced its intention to issue a further consultation paper on the review of the rating system in Scotland. However, time is running out to do that before the 2017 revaluation, which assessors will need to start preparing two years in advance.