The eyes of the UK renewables sector – and most others – will be turning to the chancellor this afternoon for his latest Budget speech. Some key decisions are expected to be announced, with the solar sector hoping for some clarity over the future of VAT rates.

Solar technologies have enjoyed a reduced rate of 5% but following an EU ruling that this was illegal, the decision was taken to increase this to 20%. With cuts to solar subsidies already hitting the industry, another blow could cripple the domestic sector further, effectively adding £900 to the cost of a 4kW system installation.

Solar Power Portal has heard that solar thermal systems may be spared from this VAT adjustment alongside other heating systems, which would be welcome considering the recent proposals to cut the technology from the renewable heat incentive. However, no assurances have been given for PV systems, not even integrated panels which could be classed as renovation materials, potentially allowing them to fall under the 5% rate.

If the decision is confirmed, the government has said it would revisit domestic rates under the feed-in tariff to maintain a 5% return on investment from homeowners – probably the least it could do. Of course, this wouldn’t be necessary at all if the EU ruling was challenged and yet the only materials not saved from the increased rate were solar.

A cynical mind might call this yet another targeted attack at the solar industry, so those minds will have to wait to be disproved either through George Osborne’s announcements today, or through government action to protect return rates when the new VAT rates come into force in August.

The chancellor may also follow-up on the announcement earlier this week that the Paris agreements for net zero emissions will be enshrined in law. The UK is already committed to an 80% reduction by 2050, but the extra push for a 100% cut on 1990 levels sends a strong message following COP21. Whether or not Osborne will feel the need to commit government funds to this goal remains to be seen, but sooner or later the public purse strings will have to be loosened for this cause.

Perhaps a bigger issue for the near future is the Levy Control Framework. It’s been well-documented how the government’s use of the cost-controlling measure has been met by industry and MPs, with seemingly hundreds of calls for greater transparency and certainty. The Energy and Climate Change (ECC) committee heard that investors are holding off until the LCF’s future is decided and if we know one thing about the chancellor, he loves a bit of foreign investment.

Considering the pressure that has built over this issue, not least from the ECC committee and others in Westminster, something on the LCF should be included in today’s Budget. Whether this is simply an extension or an update on the projected overspend, any snippets of clarity will be more welcome than silence.

However, if past form is anything to go by, whatever the announcement is will no doubt spark more questions than it provides answers.

Future CfD allocations and responses to the recent National Infrastructure Commission’s report on smart energy could also be included, particularly if the chancellor wants to be seen to be taking the NIC seriously.

For the clean energy agenda, the industry has been waiting with bated breath for the outcome of a consultation launched last year on the future of carbon taxation and reporting. The current system has been dubbed complex and difficult to navigate and DECC officials this week claimed that the outcome of the consultation will be trailed in the Budget. However, the department’s deputy director of business energy use said this week that a second consultation would be launched in July to try and nail down the detail of future policy, so don’t be surprised if only a vague response comes from today.

There could also be updates on the dangerously poor smart meter roll-out which could begin in earnest this year, while the sale of the Green Investment Bank could also get a look-in.

All of this is of course speculation, as many will know not to pre-judge the outcome of a Budget. However for the renewables sector, some good news needs to come from today. Many of course want to take government out of the equation all together, not least because of recent experiences with cuts to subsidy and other interventions. However, this is still just out of reach and so some good news would no doubt be welcome today. 

SPP will be live blogging today's news as it happens. To provide your thoughts and opinions on any Budget related news, contact [email protected]