This article is more than 3 years old

This article is more than 3 years old

New research suggests schools in England and Wales which have solar panels installed will be landed with a £1.8m bill because of business rate changes that have been branded ludicrous and nonsensical.

More than 1,000 schools installed solar power in recent years to address climate change, educate pupils and provide a crucial new revenue stream to help squeezed budgets.

But figures from 74 education authorities that responded to freedom of information requests show 821 schools with solar will together have to pay an extra £800,000 a year in business rates from April because of taxation changes. Assuming similar installation rates across the 174 authorities in England and Wales, that climbs to a total of about £1.8m.

Baroness Jones, the Green peer who obtained the numbers, said: “It’s utterly absurd to penalise schools for investing in solar panels. Schools obviously face bigger financial challenges than this, but the business rate charges will stop any plans for more solar panels.”

Energy positive: how Denmark's Samsø island switched to zero carbon Read more

Children from Eleanor Palmer primary school in Camden, north London, handed in a Greenpeace-organised petition with 200,000 signatures to the Treasury on Thursday, calling on ministers to rethink their plans.

Sarah Ewins, a teacher at the school, said: “Every penny saved by our solar project is being ploughed back into our school to buy extra resources for our pupils, so we’re upset that the tax hike will cost us more than we had budgeted for and may mean the project isn’t feasible any more.”

The Valuation Office Agency said last year that small non-domestic solar installations would no longer be exempt from rates and bigger solar systems already subjected to business rates would see a hike of 600-800%. Climate change charity 10:10 calculated it would cost a school with a typical 10kW solar system about £800 annually.

Solar-equipped private schools will duck the changes because of their charitable status. The 300-plus Scottish schools with solar panels will also be exempt, as the changes will only apply to England and Wales.

The solar industry has been lobbying for a U-turn on the government’s plans, and representatives have met Jane Ellison, the financial secretary to the Treasury, to raise concerns.

Paul Barwell, the chief executive of the Solar Trade Association, called the changes extreme and nonsensical. “We urge the chancellor to do the right thing and to drop the solar tax hike in his budget next week,” he said.

Facebook Twitter Pinterest Solar panels on the roof of school building in Liverpool, England. Photograph: Alamy

Businesses and schools with larger solar installations raise about £2m in business rates for the government each year. The tax changes come on top of huge cuts to subsidies that have seen new solar installations largely grind to a halt and cost thousands of jobs.

Nina Schrank, a Greenpeace UK energy campaigner, said: “Schools, hospitals and businesses have installed solar panels to generate their own clean electricity. It’s ludicrous that they should be unfairly taxed, making their solar projects financially unviable in many cases.”

A government spokesman defended the tax rises. “A range of factors are considered in rating state schools for business rates purposes, including improvements to buildings. Overall, state schools will see a small drop in in their rateable values following the recent revaluation.

“The solar sector has expanded considerably over the past few years, and we are confident that the Valuation Office Agency has sufficient evidence available to pursue a robust and reasonable approach to assessing solar installations for the revaluation.”