Otterpool Park update: Council approve deal with SNRG Ltd who has no operational experience of solar farms in the UK

Folkestone & Hythe District Council’s Cabinet last night approved the recommendations in Report Number C/24/68 to allow SNRG Ltd, to be the solar park provider at Otterpool Park, pending a legal review of the Options Agreement and Heads of Terms. The Cabinet also approved the Council to enter into a lease on council-owned land (in orange) Phase 1 of the Solar Park, following the award of planning consent. 

SNRG Ltd majority shareholder is Antin Infrastructure Services Luxembourg II S.A.R.L; which is based in one of the most notable tax havens in the world. Using Antin Infrastructure Services Luxembourg II S.A.R.L, which is a group finance company within the Antin Infrastructure Partners organization, is one of the most common tax-avoidance techniques, using profit shifting. 

A typical structure involves a subsidiary incorporated in Luxembourg (Antin Infrastructure Services Luxembourg II S.A.R.L for example) with the sole purpose of lending money to its sister companies, SNRG Investment Ltd, SNRG Ltd. Funds are often raised at interest rates reflecting the credit rating of the corporate group, for example, at 1%. The subsidiary then lends the money to its group companies at, say, 7%. The interest payments made by the UK group company effectively erode the tax base in the UK.

The subsidiary in Luxembourg is subject to very low effective tax rates due to the country’s preferential tax regime for group finance companies. This means the tax structure creates deductions in in the UK from internally generated interest expenses, but the interest payments are subject to a much lower tax rate in Luxembourg.

The Council state on it’s website they operate as a Fair Tax organisation. A fair tax organization is an entity that advocates for a tax system perceived as equitable and just. Is it equitable and just the Council have approved SNRG Ltd to be the solar farm provider (subject to legal review) knowing its majority shareholder is involved in profit shifting – a form of tax avoidance? 

Moving on, the Council & Otterpool Park have been collaborating with SNRG Ltd since 2023, according to SNRG Ltd latest set of accounts on Companies House.

SNRG Ltd have no operational experience of solar farms in the UK. What SNRG Ltd do have, according to the latest data published by the Dept of Energy Security & Net Zero, is planning permission for seven sites to install solar panels, for roofs, and each of these seven sites in the north of England & Scotland are awaiting construction. That said, SNRG Ltd do have experience of fitting solar panel to roofs of homes on development sites which have been completed.

Despite this lack of solar farm experience, the Cabinet approved the recommendations 

To provide delegated authority to the Director of Housing and Operations (Andy Blaszkowicz) and the Council’s S151 Officer (Lydia Morrison) following the legal review to sign the Options Agreement and Heads of Terms with the preferred solar park provider, SNRG Ltd, to enable them to apply for planning consent.

To provide delegated authority to the Director of Housing and Operations (Andy Blaszkowicz ) to enter into a lease on council-owned land (in orange) Phase 1 of the Solar Park, following the award of planning consent.

The Council aim to approve the Heads of Terms and Options Agreement with SNRG Ltd for solar park (phase 1) sometime in March 2025. This will then allow SNRG Ltd to commence a planning application sometime in March/April 2025. Then in early 2028 January 2028, the first smart grid connection of c150-250 homes at Otterpool Park will go live , subject to the various consents needed.

Over a 30 year period, the Solar Farm will provide an income to the Council & Otterpool Park LLP of £24.8m, through Annual rent, dividend payment and smart grid connection fee per home at Otterpool. 

The solar farm will be phased in conjunction with the build out of homes.

 

Folkestone & Hythe DC will then – subject to legal review – get into bed with a company who has no experience of constructing solar farms – what can go wrong?

At last night’s cabinet meeting, there was no discussion about SNRG Ltd ownership in Luxembourg, no discussion around profit shifting, or tax avoidance. All they spoke about, especially Cllr Jim Martin Leader of the Council, was achieving the “holy grail” of net zero.

The conundrum then is profit shifting v net zero.

We need tax to pay for schools, hospitals roads etc, but with SNRG Ltd now firmly ensconced at Otterpool, profit shifting (a form of tax avoidance) will more likely than not become a reality.

The other side of the equation is the simple fact we do need to reach the UK’s net zero by 2050, and a solar farm at Otterpool will help the Council achieve its net zero target.

All we can say is we are stuck between a rock and a hard place.

There are legitimate uses for offshore companies and trusts. The inclusion of an entity in this blog post is not intended to suggest or imply that they have engaged in illegal or improper conduct.

The Shepway Vox Team

Dissent is NOT a Crime