As 2015 draws to a close, Solar Power Portal runs through some of the biggest and most interesting stories of the year. In part two, we look at the consequences of the European Union’s ruling over the UK’s VAT regime on energy saving materials and SunEdison’s decision to withdraw almost completely from the UK market in light of proposed FiT cuts.

HMRC confirms intent to rollout 20% VAT rate on solar panels on 1 August 2016

If the prospect of an 87% cut to the feed-in tariff and a de facto extension of the minimum import price were not enough to cause despair for UK installers, then the European Court of Justice’s verdict over the UK’s VAT regime on energy saving materials (ESM) just might have been.

In June the EU ruled that by attaching a 5% VAT rate on ESMs instead of the full 20% the UK was in breach of the Union’s directive and ordered it to reinstate the full rate. While the government said at the time it would look to do “all it could”, there was to be no way around the verdict and earlier this month HMRC confirmed that it has proposed to reinstall the rate on solar panels on 1 August 2016.

The move is to add roughly £900 to the cost of a standard domestic installation – a lofty sum at the best of times, potentially ruinous under a more stringent FiT – and trade bodies have urged the European Commission to reconsider. Chances of the Commission relenting are slim at best however, and an increased VAT rate looks set to be just another hurdle for UK solar to overcome next year.

SunEdison to exit ‘uneconomic’ UK market

Cuts to the feed-in tariff originally proposed to be of up to 87% set the market into a spin when they were announced in late August, and the effects were still being felt in October when global solar giant SunEdison announced that it intended to exit – or ‘de-emphasise’, as the company called it – the UK market.

Labelling the “uneconomic” business conditions created by the proposals, SunEdison confirmed it was to sell the Mark Group business that it only acquired several months before, setting off a chain reaction of events which ultimately resulted in around 1,000 employees at the Leicester-based firm being made redundant. The business doesn’t appear to have been in pristine condition before then admittedly, but the FiT proposals proved to be the straw that broke the camel’s back.  

SunEdison has gone on to have something of a torrid time internationally too. Its problems have been well documented and its share price has fallen from a high of US$32.13 to just US$6.71 as of yesterday’s close, having plumbed to depths of US$2.82 in late November. The slump has had major repercussions on its proposed merger with Vivint and the company has had to ditch plans to buy a stake in Brazil’s Renova Energia along the way.

In the UK, Mark Group proved to be just the first business to fall under the weight of government intervention and was swiftly followed by Climate Energy. Southern Solar fell several weeks later and a recent Solar Trade Association poll revealed that as many as 1,800 jobs have been lost from the solar sector so far. DECC’s impact assessment for the reset of the FiT estimates that figure could rise to ten times that amount by 2019. A select committee inquiry into investor confidence in the energy sector is ongoing, but is highly likely to report damning findings in the new year.

Part one of our top stories of 2015 rundown can be read here.