Renewable Energy Sector – Top 10 considerations for a 2026 operational and strategic review

Whether you operate solar, wind, battery storage, EV charging or wider energy transition assets, growth often brings additional complexity. New projects, acquisitions, financing arrangements and evolving regulatory requirements can result in critical matters being overlooked or deferred.

Drawing on our experience advising renewable energy developers, independent power producers, infrastructure funds, asset managers, battery storage operators, and wider energy transition businesses, we have compiled the top 10 commonly overlooked areas that we believe warrant review:

1. Have you reviewed your group structure and project company arrangements recently?

Renewable energy groups often evolve through project acquisitions, refinancing exercises and the creation of new special purpose vehicles (SPVs). Over time, structures can become more complex than originally intended. Consider whether your current structure remains fit for purpose from a tax, governance, financing and operational perspective, and whether dormant or redundant entities can be simplified.

As part of this review, businesses should assess whether their Construction Industry Scheme (CIS) obligations are being met, particularly where SPVs engage contractors for construction, installation or infrastructure works. This includes considering whether entities should be registered as CIS contractors, whether subcontractor payments are being reported correctly, and whether opportunities exist to improve cash flow through effective management of CIS deductions. Intra-group construction arrangements and changes in project ownership can also create CIS compliance risks that should be reviewed periodically.

2. Have you modelled the long-term tax impact of your portfolio?

Many infrastructure businesses focus heavily on project cash flows but less frequently revisit long-term tax assumptions.

Area’s worth reassessing include capital allowances availability, deferred tax balances, financing structures, interest restriction positions, losses carried forward and the tax implications of future disposals or refinancing events.

3. Are your financing arrangements still appropriate?

The financing market for renewable energy projects continues to evolve, with many businesses carrying a mixture of acquisition debt, construction facilities, development funding and operational project finance.
Now may be a good time to review covenant compliance, refinancing opportunities, interest rate exposure, hedging arrangements and whether financing structures continue to support your strategic objectives.

4. Have you assessed the impact of Corporate Interest Restriction (CIR) rules across the group?

Renewable energy infrastructure businesses are frequently financed through a combination of shareholder debt, project finance facilities and external borrowing arrangements. As portfolios expand and financing structures evolve, the UK’s Corporate Interest Restriction regime can become increasingly complex and may significantly affect the group’s effective tax rate.

Businesses should consider whether interest deductions are being restricted, whether available interest capacity is being fully utilised and whether elections remain appropriate. Particular attention should be given to acquisitions, refinancing events, changes in leverage levels and the interaction between project-level and group-level financing. A periodic review can help identify opportunities to preserve tax relief and avoid unexpected restrictions arising in future periods.

5. Are all of your capital allowance opportunities being maximised?

Renewable energy projects typically contain significant qualifying expenditure. As portfolios grow through acquisitions and development activity, it is important to ensure that capital allowance claims remain optimised and that historic opportunities have not been missed, particularly where acquisitions, major asset replacements or battery storage investments have occurred.

6. Are you maximising available R&D tax incentives?

While renewable energy businesses often associate R&D incentives with technology companies, many renewable infrastructure businesses undertake activities that may qualify for relief.

Common qualifying areas can include battery storage innovation, grid integration solutions, control systems development, forecasting technologies, energy optimisation software, hydrogen projects, carbon capture initiatives and improvements to generation efficiency.

Given the increased scrutiny of R&D claims, businesses should ensure that any claims are appropriately documented and supported, while also considering whether historic opportunities have been missed. For groups investing heavily in innovation as part of the energy transition, R&D incentives can provide valuable support for future growth and investment.

7. Is your VAT recovery methodology still appropriate?

VAT can be particularly challenging for infrastructure businesses operating across multiple project entities, jurisdictions and revenue streams. Businesses should periodically review whether their VAT recovery methodology remains fair, reasonable and supportable, particularly where there are a mix of taxable, exempt and non-business activities.

Common areas requiring consideration include the application of partial exemption methods, the treatment of domestic reverse charge transactions, overseas supplies and related VAT recovery implications, VAT registration timing during the SPV development phase, and the impact of intra-group transactions and VAT grouping arrangements. Changes in business activities, project structures or supply chains can significantly affect VAT recovery positions and may require adjustments to existing methodologies.

8. Are your transfer pricing and international structures robust?

Many renewable energy groups now operate across multiple jurisdictions, particularly where investors, holding companies, funding vehicles or project development teams are located overseas. As groups expand internationally, the associated tax, employment and compliance obligations can become increasingly complex.

Businesses should ensure that intercompany financing, management service arrangements, transfer pricing policies and international structures remain appropriate, commercially supportable and adequately documented. This includes reviewing the pricing of intercompany loans, guarantees, development services, management charges and intellectual property arrangements to ensure they align with economic substance and local transfer pricing requirements.

Global mobility is another area that is often overlooked. Employees frequently travel internationally to oversee project development, construction, asset management and board governance activities. Equally important is the consideration of offshore workers and rotational workforces supporting renewable energy projects and the wider energy transition, where personnel may operate across multiple offshore locations. These arrangements can create complex tax, social security and compliance obligations for both employees.

Even short-term business travel can create employer reporting obligations, payroll withholding requirements, social security considerations and permanent establishment risks in overseas jurisdictions. Businesses should therefore assess whether employee travel patterns, offshore workers, remote working arrangements and cross-border secondee arrangements could trigger additional tax or compliance obligations, and whether appropriate tracking and governance procedures are in place.

Particular attention should also be given to the location of key decision-makers and the performance of value-generating activities within the group. As renewable energy businesses mature, functions such as project origination, financing, engineering oversight and asset management may become increasingly international, potentially affecting transfer pricing outcomes and the tax residence or taxable presence of group entities.

9. Are you ready for FRS 102 and the latest accounting developments?

Changes to FRS 102 and evolving accounting guidance may affect renewable energy businesses in several areas, including revenue recognition, leases, financial instruments and climate-related disclosures.

Companies should assess the impact of forthcoming changes early and consider whether systems and reporting processes will require adjustment. This reassessment includes reviewing power purchase agreements (PPAs) and revenue arrangements to ensure that revenue reflects commercial realties and identifies the different performance obligations within the contracts.

10. Have you reviewed your asset retirement and decommissioning provisions?

As operational assets mature, decommissioning obligations become increasingly important. Businesses should periodically reassess assumptions underpinning restoration costs, inflation estimates, discount rates and asset lives to ensure provisions remain appropriate and supportable.

Would you like to know more?

The renewable energy sector continues to present significant opportunities, but increasing regulatory requirements, evolving market dynamics and growing investor expectations mean periodic operational reviews are more important than ever.

A structured review of these areas can help identify risks, improve efficiency and ensure that businesses are well positioned to support future growth, attract investment and maximise shareholder value.

If you would like to discuss any of the above and how it may affect your business, please contact Andrew Snook in the first instance using the form below.