Revealed: The Tax Hitch Slowing Efforts to Grow District Heating

By District Energy posted 09-12-2019 10:28

  

The Herald

Summary

The Scottish Government, for example, will start phasing out fossil fuels for warming new homes as early as 2024. But there is a hitch.

One of the most obvious alternatives to inefficient single-home gas boilers are district heating systems, where hot water is pumped around multiple properties. However, there is a tax disincentive for such schemes. One that has put local and national authorities at loggerheads.

Glasgow City Council, which has set itself a target of getting to zero-net carbon by 2030, wants to invest in district heating. However, if it does so, it will have to pay out non-domestic rates. That is because district heating systems are regarded as businesses and taxed - remarkably, say city insiders - more than the utilities which supply gas or electricity to personal boilers.

The city bought and paid for a district heating system for the neighbourhood created as a legacy of the 2014 Commonwealth Games. This hefty gas-fired system heats hundreds of homes as well as the landmark Emirates indoor sports arena.

That comes with a tax bill of first £137,000 a year and now - thanks to a Scottish Government cut - £70,000. The city has decided to take this on board, so that residents do not pay. But officials stress they cannot foot the tax bills of the network of district heating systems they would like to encourage, perhaps under a municipal energy firm.

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