Solar Power Valuation Hikes Lidl Business Rates up by 528%
The German supermarket chain Lidl has had a gigantic increase in its business rates to 528% due to a change in the valuation of having solar installations at its sites.
At this moment in time, Lidl has solar panels installed at seven of its UK stores, at each of these stores the solar panels provide over 30% of the energy that is demanded. Installing solar panels at its sites leads to an increase in the business rates that Lidl must pay at each site. 10 years ago, a 180 kilowatt (peak) system would have equated to £689 per year however in 2017 the same system would equate to £4,329 per year.
The reason there has been such a large increase is because of a change in the way that business rates for sites with solar panels are calculated. Originally, in England and Wales, there would be a single method used by the Valuation Office Agency for valuing solar. This rate was at a value of £8/kilowatt over all solar assets at a site.
However, three years ago, this method used for valuing solar was controversially changed. Solar power was split into two categories, mainly self-consumption, which Lidl falls under and then mainly export.
The valuations for the self-consumption category have increased by around six to eight times and therefore hiking up business rates for companies which make use of their own solar power, such as Lidl. This has also had a knock on effect as the return on investment period has shot up from nine years to fourteen years.
Critics have been against the change of the rates. The Solar Trade Association are against the move and are currently in the process of petitioning against the mainly export solar power receiving the same increase. They believe that the new rates that have been brought in are a disadvantage to commercial solar projects.
The chief executive of the Solar Trade Association, Chris Hewett, has stated that it does not make any sense for companies to be leading the way by making use of solar power to then only be penalised by business rates rules that are seemingly out of date. He went on to say that the Chancellor needs to take urgent steps in reforming business rates to stop further anomalies occurring.
Lidl are in the process of planning to install solar panels on a further 15 stores a year for the foreseeable future. However, the plans are going to go under ‘continuous review’ as a result of the high business rates that are currently in place.
If Lidl do continue with their plans, the solar ambitions the company has will lead to a £3 million investment in the next year alone, as they plan to install solar panels on a regional distribution centre, their new head office (which is currently under construction) and continue installing panels on their stores.
Lidl are not the only large supermarket with plans to make the most of their large roof space through solar installations. Tesco announced a major green project last year which included the installation of solar panels on 187 of its sites, covering an area of 335,000 m2 whilst Aldi has been installing solar panels on its sites for many years now. They currently have over 96,000 solar panels which help power its operations. Sainsburys were one of the earliest of the large supermarkets to make use of solar power when back in 2012 they installed the largest rooftop mounted solar PV in the whole of the UK.