Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Cuirim fáilte roimh an rún atá os comhair na Dála inniu agus muid ag déileáil leis an ráta VAT ar phainéil a úsáideann grian le fuinneamh a ghiniúint. Beidh seo ina bhuntáiste mór do go leor teaghlaigh atá ag iarraidh na solar panels seo a chur ar a n-árasáin, rud a ísleoidh an costas muna n-ardaíonn an costas ar na painéil iad féin.

I welcome this financial resolution put forward by the Minister. Solar energy has the potential to make a significant contribution to our energy mix, despite only accounting for a very small fraction of our electricity generation to date. Solar energy, however, will play an increasingly important role in Ireland's future energy mix. Despite what we often think, we receive a significant amount of sunlight, particularly in summer, meaning there is great potential for us to harness better solar energy for electricity generation in future. The cost of solar panels has fallen sharply in recent years and, hopefully, we will continue to see these costs coming down. They are becoming increasingly competitive with other energy sources, making them more attractive for investment. Given that solar panels allow for local generation of energy, they provide for greater energy security. In short, any measure that increases the take-up of solar panels is to be welcomed.

Amendments to annex III of the VAT directive last year added several new categories that could have reduced or 0% VAT rates applied to them by member states. Up to this point, the standard rate of VAT applied to the supply of solar panels. Under these changes, it is now possible to apply a 0% rate of VAT on the supply and installation of solar panels. This is what this financial resolution provides for and Sinn Féin welcomes this measure. By making their supply and installation more affordable, this reduction in VAT will encourage people in respect of the uptake of solar panels and increase the role of solar energy in our energy mix, thereby reducing our reliance on fossil fuels. The Department of the Environment, Climate and Communications has estimated the measure would reduce the average cost of the supply and installation of solar panels by as much as €1,000 if it was passed on to consumers and would reduce the payback period for installation from seven to 6.2 years. I note the Minister's comments regarding supply shortages and the possibility that prices could go up, but this situation needs to be monitored carefully. I will come to that aspect in a minute. The 0% rate of VAT could also reduce households' energy bills by reducing their reliance on the electricity grid. This measure could provide a spur to the solar energy sector by making it more competitive with other energy sources, leading to the creation of green jobs and investment in the sector.

This measure also has the potential, if it is followed by a greater uptake of solar panel installations, to help us to reach our climate targets by reducing our greenhouse gas emissions and reaching the goal of generating 70% of our electricity from renewable sources by 2030. As the Minister said, it is estimated this tax change will cost approximately €19 million annually. If it is successful in achieving some of the objectives I mentioned, it will be money well spent. I welcome that this measure will now take effect from 1 May 2023 to address any chilling effect this VAT change could have caused. This was an issue my colleague Deputy O'Rourke raised previously. He warned that projects could be paused in anticipation of a reduced rate and that this was causing uncertainty in the industry.

There are, of course, outstanding issues that I would appreciate the Minister addressing. Currently, 233 installers are registered with the Sustainable Energy Authority of Ireland, SEAI. While most players are expected to pass the VAT reduction on to consumers, some have warned there is a risk of price increases as a result of the VAT reduction. How does the Minister plan to monitor and respond to this development, should it play out? Hopefully, it will not.

Furthermore, I note that the Department has said that this 0% rate will apply to the supply and installation of solar panels. The tax strategy group paper on VAT said the 0% rate could only apply to the supply and not the installation of solar panels, so perhaps the Minister could clarify this point for us when he responds. Additionally, can he clarify if the 0% rate of VAT will apply to the supply and installation of storage batteries as well?

We in Sinn Féin welcome this measure. As I said, it can play a very positive role in increasing, hopefully, the uptake of solar panels, reducing household costs and contributing towards achieving our climate action goals.

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