Impact of tax relief and Feed in Tariff changes on MaidEnergy Co-Operative

Government has come in for some fierce criticism from the community energy sector in recent weeks. Proposals to deny member investors access to tax relief – which represent a significant u-turn from Whitehall - come on top of further proposals to scale back minimum energy payment levels through the Feed in Tariff (FIT).

But what does all this mean for community energy organisations and their projects? MaidEnergy Co-Operative had ambitious plans for six 50kw solar installations on schools and community buildings in the Berkshire and North Surrey areas. Their business model was based on giving local investors a decent return, showcasing low carbon technology and lowering bills for schools and community groups.

That business model took into account FIT levels and tax relief under the Seed Enterprise Investment Scheme (SEIS). But with the current Feed-in-Tariff levels likely to end in February 2016 and SEIS set to be scrapped on November 30 for those using FITs, the landscape has significantly changed for MaidEnergy. 

Leah Robson is a MaidEnergy Director and Volunteer. She said: “We were feeling confident we’d get all six installations done. Now we’ve scaled back our prospects again. We set up six sites in the business model – but now we’re up against it just to get those first two sites.”

"If you are going to change something then at least give 12 months’ notice. It’s really gutting when you’ve put a lot of time and effort into something." Leah Robson, MaidEnergy

Community energy organisations only had a matter of weeks to react to the surprise tax relief changes, with many rushing to push through share offers before the end of November. MaidEnergy’s offer is 130,000 shares at £1 each – with minimum and maximum investment levels set at £250 and £15,000 respectively – and an end date of November 18 (2015).

Leah Robson (second from right) with other members of the MaidEnergy teamLeah Robson said: “We’ve had our share offer live four weeks and got £47,650 (by 12 November). It’s reasonable money, but a long way short of what we’d need for all six sites.” The MaidEnergy Director criticised the way in which Government’s announced its tax relief changes.

She said: “It felt so underhand. There didn’t seem to be any official announcement.” And she also derided the imposed timescales. Leah Robson said: “That’s not a business planning cycle. If you are going to change something then at least give 12 months’ notice. It’s really gutting when you’ve put a lot of time and effort into something.

“If you’re trying to encourage people to volunteer and work in their own time then things will happen more slowly. You want to encourage volunteering, rather than say ‘I tried community energy and the Government changed plans at the last minute’.” 

But community energy has already proved its resilience and ability to overcome adversity. The rug may have been pulled from under the sector, but those involved are dedicated in their desire to build a more sustainable and community-based sector. 

Leah Robson said: “I’m an optimist and still hopeful we’ll get a few sites done. We could also talk to other co-ops – we’re not precious over who does them (the solar energy installations). And you never know, we might just pull all six out of the hat.”