Supporting Renewable Energy through Business Rates

August 2011: The issue of how the Government’s proposals for business rate retention by local authorities could help fund sustainable energy initiatives has been highlighted previously on this website, and on 18 July, CLG’s consultation paper, Local Government Resource Review: Proposals for Business Rates Retention sets out the detailed proposals for a new rates retention scheme to replace the current local government finance system. Supporting this consultation paper, the Government has now published eight technical papers exploring in further detail how councils would be allowed to keep locally generated business rates, which should help enable them to borrow against future rate income.

In addition to this potential new investment stream into energy projects, included amongst the technical papers is a specific Government’s proposal to support communities hosting renewable energy projects by allowing them to keep the business rates generated from such projects. The paper covers issues such as:

  • the types of renewable energy that would be covered by the proposals
  • what is meant by a “new renewable energy project”
  • how different scenarios of renewable energy projects would be dealt with
  • who would be responsible for determining whether a project was covered by the scheme and, therefore, not taken into account in the setting of any levy; and
  • how the business rates from a renewable energy project might be split between different authorities in two-tier areas
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