The government's u-turn on tax relief has "killed off" some community energy projects - and will make it more difficult to raise funds for future projects says Bristol Energy Cooperative.
Owned by local people who have already invested £250,000, Bristol Energy has installed 143 kilowatts of solar panels on six community buildings, which all benefit from greener and cheaper electricity. It has been planning the next phase of its development over the last year – an ambitious scheme to install solar panels on 20 community buildings and schools, and to build two solar farms. The co-operative aims to raise £10.5 million - with £2.8 million through a community share issue which enables local people to invest in and own the scheme.
But investors will only be eligible for tax relief if they buy shares before 29 November 2015 following the Government's community energy u-turn. That has forced Bristol Energy to slash the timeframe for its share offer from between eight and 10 weeks to just 25 days.
Chris Speller, Co-Director of Bristol Energy, said: "Like hundreds of other community owned energy groups in the UK, we are trying to do something new and challengingm– to generate green energy that is owned and run by local people and recycles benefit back into the local community.
“People don’t invest in community share offers like ours simply for financial gain, but nevertheless a reasonable financial return is necessary in order to raise sufficient funds for ambitious projects. The government’s very recent and sudden announcement has not only at a stroke killed off some fantastic projects across the country it will make it harder to raise the money in the future.”
The changes to tax relief took the energy sector by complete surprise after being introduced into the third reading of the Finance Bill, October 2015. They affect Enterprise Investment Scheme (EIS) tax relief and Social Investment Tax Relief.