The potential scale of the opportunity that renewables present, combined with the government incentives available, this sector looks extremely attractive for the budding entrepreneur – attractive enough that it should be well worth looking into the deepest elements of the industry if you’re looking for a profitable new business.
That’s beyond the scope of this article, but here, with the help of Dr. Lewis Lack of Ocean Resource Limited, is a brief overview of some of the key areas.
Which niches are still empty?
Dr. Lack notes that “Solar (PV) is in my personal view still awaiting new technology to come along. This company is on the right track but slow to market.”
Solar power is one of the most visible and obvious areas for renewable energy, with a relatively huge private consumer market, so the idea that there’s not a great deal being developed around photovoltaic technology is genuinely surprising.
It makes sense though – much of the funding into R&D has gone into the technology in the cells themselves, not into the technology and infrastructure surrounding the cells. It’s all about promoting the technology as effective and efficient, which is fantastic – but Naked Energy show that there’s a whole lot further to go in this area before commercial opportunities are exhausted!
The benefit from R&D tax credits should stack with other tax benefits for companies focussed on renewables to help forward-thinkers get a substantial boost.
Opportunities for wind energy R&D
In many cases, industry standards for renewables are still limiting how creative solutions can get.
“Oil and Gas standards were developed for a very different economic world, so I am still concerned that these are pushing up costs as they demand a very high standard when combustible fluids are used.”
There are two sides to this story, though, and the other side is that there’s significant potential for very real disruption to existing models – and disruption is a good sign that there’s both income and R&D tax credits to be seized.
Wind energy clearly has a great deal of potential for innovative startups precisely because of this obstacle, which forms a moat around any company – like Ocean Resource Limited – who have managed to generate interest in their product despite a cautious industry and mismatched regulations.
Ocean Energy are also somewhat unusual. As Dr. Lack says, “Great claims are made for very small steps,” while Ocean Resource is in his own words “a new paradigm”. This suggests that there’s room for companies with an incremental, iterative approach to project development alongside companies making more dramatic strides forward.
Since even the smallest of steps could qualify for very real tax credits, the scale of your endeavour doesn’t really matter – what matters is that there’s a great deal of room for improvement.
What obstacles stand in the way of renewable R&D?
“Risk averse clients” are the first obstacle Dr. Lack highlights. This seems almost like an opportunity in disguise; a renewables company that subcontracted research into new areas could be able to claim back R&D tax credits (mitigating any risk), while remaining able to outpace its competition with improved technology and rapid growth.
The second obstacle is standards developed for different, older, industries, which can prove to be inefficient and wasteful.
Finding a way around these two issues would seem to be the deciding factor for success as a renewable energy startup.
How can ForrestBrown help?
“We can get R&D credit for a range of activities now we have a good financial partner – ForrestBrown.”
While the misconception still exists that R&D tax credits can be difficult to qualify for, and to the untrained eye the qualifying criteria can appear overly prescriptive, R&D tax credits offer significant advantages for eligible businesses, and the government actively encourages companies to claim the relief. Navigating the R&D claims process, and ensuring that R&D claims are maximised requires a thorough understanding of the requirements of the scheme, and the activity that qualifies.
That’s where we can help, with experience specifically in renewables and wind power R&D tax credits.
Get in touch for more information, or to arrange a free consultation with one of our friendly tax team.