Government Incentives for Solar Power in UK Businesses

The United Kingdom government has been at the forefront in promoting the use of renewable energy sources, particularly solar power, in businesses. This is part of the broader strategy to reduce carbon emissions and combat climate change. This article explores the various incentives that the UK government has put in place to encourage businesses to adopt solar power.

The Feed-in Tariff (FiT) Scheme

One of the key incentives that the UK government has provided for businesses to adopt solar power is the Feed-in Tariff (FiT) scheme. Introduced in 2010, the FiT scheme was designed to encourage the uptake of small-scale renewable and low-carbon electricity generation technologies. Under this scheme, businesses that install solar power systems are paid for the electricity they generate and use, as well as for any surplus electricity they export back to the grid.

The Smart Export Guarantee (SEG)

Following the closure of the FiT scheme to new applicants in March 2019, the UK government introduced the Smart Export Guarantee (SEG) in January 2020. The SEG requires energy suppliers with more than 150,000 customers to pay small-scale low-carbon generators for the electricity they export to the grid. This provides an additional income stream for businesses that generate more electricity than they use.

Enhanced Capital Allowances (ECAs)

Another incentive for businesses to invest in solar power is the Enhanced Capital Allowances (ECAs) scheme. This allows businesses to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. This means that businesses can deduct the full cost of these items from their profits before tax, providing a cash flow boost and an incentive to invest in energy-saving equipment.

Case Study: IKEA

A notable example of a business that has taken advantage of these government incentives is IKEA. The furniture retailer has installed solar panels on the roofs of its stores across the UK, generating a significant proportion of its electricity needs. This has not only reduced IKEA’s carbon footprint but also resulted in substantial cost savings.

Impact of Government Incentives

Government incentives have played a crucial role in promoting the adoption of solar power in UK businesses. According to the Solar Trade Association, the UK had over 1,000 MW of commercial rooftop solar installations by the end of 2019. This is a clear indication that businesses are recognising the financial and environmental benefits of solar power.

Conclusion

In conclusion, the UK government has provided a range of incentives to encourage businesses to adopt solar power. These include the FiT scheme, the SEG, and the ECAs scheme. These incentives, coupled with the falling cost of solar technology, make solar power an increasingly attractive option for businesses. Not only does it help to reduce carbon emissions, but it can also result in significant cost savings. As the case of IKEA demonstrates, businesses that take advantage of these incentives can reap substantial benefits.