Michael McGrath (Cork South Central, Fianna Fail)
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Micro-generation of electricity is the small-scale production of electricity by consumers who generate electricity at their own homes for their own consumption and sell the excess electricity produced.

Under the EU Clean Energy Package, Ireland introduced an obligation on suppliers to offer the Clean Export Guarantee tariff to new and existing micro-generators so that they will receive payment for excess renewable electricity they export to the grid, reflective of the market value.

Section 216D of the Taxes Consolidation Act 1997 provides for an exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption. The profits which are exempted are those from the generation of residual electricity at an individual’s qualifying residence from 1 January 2022 until 31 December 2025.

The scheme provides for a tax exemption of up to €200 per year for tax years 2022 and 2023. Finance Act (No.2) 2023 increased the exemption available for tax years 2024 and 2025 to €400 per year.

There is no requirement on individuals to include the exempt profits in an income tax return. Therefore, where an individual is not already required to file an income tax return, the fact that he or she has exempt profits from the micro-generation of electricity does not necessitate the filing of a tax return. Where an individual is already required to file an income tax return, the exempt profits do not need to be included on the return.

Any income in excess of the €200 or €400 exemption limit which is earned from micro-generated electricity must be declared by the individual on their annual tax return and will be subject to income tax, USC and PRSI in the usual manner.

The individual does not need to own the residential premises in question, it could be a rented property. However, he or she must use the property as his or her sole or main residence during the tax year. Additionally, the individual must be named on the electricity bill for the premises. Where more than one individual is named on the electricity bill, each individual can avail of the exemption.

The aim of this tax exemption is to remove the potential administrative barrier, for those who engage with the Clean Export Guarantee scheme, that could be created by the declaration and payment of tax on relatively small amounts of sums received for the export of limited amounts of electricity to the national grid. I increased the exemption to €400 to ensure that the typical domestic renewables self-consumer will pay no tax on income of this source.

I believe this measure represents an important incentive to citizens who are integral to the energy transition in the years ahead.