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Inheritance tax ‘a major issue’ holding back solar energy development

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Decisions: Elgin Energy’s solar panels on a dairy farm in Skeoughvosteen, Co Kilkenny

Decisions: Elgin Energy’s solar panels on a dairy farm in Skeoughvosteen, Co Kilkenny

Decisions: Elgin Energy’s solar panels on a dairy farm in Skeoughvosteen, Co Kilkenny

Inheritance tax provisions relating to solar farms are holding back the industry here and causing interested farmers to be turned away from the developments, the Oireachtas Agriculture Committee has been told.

Under the tax code, Agricultural Relief is only available on land where solar panels are installed, provided that the area occupied by the panels and ancillary equipment does not exceed half of the land comprising the gift or the inheritance.

Dr Tara Reale of solar energy company Lightsource told the Committee that the provision is becoming “more and more of a major issue” for solar farm development here.

She explained that when the threshold was initially implemented, the trend in Ireland was for these small, community-sized solar farms that required only 20-40ac of land.

“Then there could be a situation where one landowner could conceivably have 80ac or where there could be two landowners who, between them, would not be impacted,” she said.

Dr Reale highlighted that policy has changed since then and in order to get grid access, especially from EirGrid, a project must be large-scale.

“This is also in the context of the economics… the more you buy, the cheaper per megawatt the actual cost. This has driven developers towards these large-scale farms,” she said.

Developers, she said, were limited in where they could put a solar farm. She pointed to planning considerations — including those relating to visual impact — special areas of conservation and heritage issues.

“Many landowners are interested, because of diversification of income, wanting to retire or the fact that their children are not interested in farming.

“If their neighbours are also willing to go in on the project, this is on the proviso that they too have land that is appropriate from a topographical point of view… you are often in a situation where there are perhaps 150ac or 160ac of land.

“This may seem like a very large amount of land… but it is not really sufficient in many instances.

“We would have said to the farmer involved that there would be no point in us optioning the land because it would be highly likely that the project would never get off the ground because the economics would not work.

Irish Solar Energy Association (ISEA) CEO Conall Bolger told the committee that his firm supports the characterisation that solar farms constitute ‘energy farming’ as much as farming traditional agricultural products.

“We have engaged with the Department of Finance, and we have been asked to provide more information.

“I am not sure that we have done a good job convincing them just yet, but we are working hard on the topic,” he said.

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