Triple whammy for solar sector

BRITAIN’S solar power sector faces a “triple whammy” of attacks from the European Commission and the Treasury.

The EC is threatening to introduce a tax on the €21 billion (£18bn) worth of solar panels imported from China, where British firms source much of their product, which could apply retrospectively.

European commissioners are also taking the UK government to the European Court of Justice over its refusal to charge 20 per cent value- added tax on solar panels instead of its present 5 per cent.

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A further 3.5 per cent cut in the feed-in tariff – the amount customers are paid for selling electricity to the grid – is also due to come into effect in May.

The EC will make its decision on its possible Chinese levy in December.

Chris Byrne, an associate at Fife-based law firm Murray Donald, warned: “The immediate effect for the industry is a period of up to nine months of uncertainty as businesses are faced with the threat of an additional retrospective duty without knowing what the level of that duty will be.

“This will have a knock-on effect for consumers too, as many businesses will be forced to increase their costs to provide for the possibility of a duty being levied.”

But Paul Barwell, chief executive of the Solar Trade Association, argued that solar panels still give a 12 per cent return on investment at a time when bank accounts are paying low interest rates.

“The EC levy on imports is a curve-ball and comes at a time when the industry had stabilised after last year’s feed-in tariff cuts,” he said. “If the UK loses its case against the EC then we hope the Treasury can adjust the feed-in tariffs again to compensate.”