In 1998 I introduced a scheme for tax relief for corporate investment in certain renewable energy projects. To qualify for the relief the energy project must be in the solar, wind, hydro or biomass technology categories, and be approved by the Minister for Public Enterprise. The relief takes the form of a deduction for tax purposes from a company's profits for an investment in new ordinary shares in a company setting up a renewable energy project. The relief is capped at 50% of all capital expenditure, excluding land, net of grants, for a single project or £7.5 million, whichever is lesser. Investment by a company or group is capped at £10 million per annum, and unless the shares are held for at least five years by the investor company the relief will be withdrawn.
Following clearance of the scheme by the European Commission, I made an order providing that the relief would come into operation from 18 March 1999 for a three year period.
While the relief was designed for a corporate structure, individuals can also invest in wind energy through a limited partnership structure. However, in regard to such limited partnerships, in general, there were major abuses and I had to close off this loophole in the Finance Act, 2000, in respect of the availability of the relief to individuals involved in a partnership structure. Closing off this abuse confines in general the application of the relief to active partners in partnerships. However, I would like to point out that in the case of non-active limited partnerships investment in renewal energy, transitional arrangements were provided for in the Finance Act, 2000, which allow for expenditure incurred under an obligation entered into before 1 March 2001 to be excluded from this restriction. I believe that these transitional arrangements are quite generous. On this basis until the existing three year scheme has elapsed, I do not intend broadening the existing scheme.