“Government windfall tax on electricity generators risks investment in renewable projects”
The windfall tax on electricity generators announced in the government’s Autumn statement is a severe deterrent to new renewable energy projects that are desperately needed, says RenewableUK.
Chancellor Jeremy Hunt announced that renewable electricity generators will face a 45% windfall tax from January 2023 until March 2028. By comparison, the windfall tax for the oil and gas sector will be set at a lower rate of 25% to 35%.
RenewableUK, which supports more than 450 member companies building renewable electricity projects in the UK and around the world, says that new wind and solar projects are already the UK’s cheapest sources of new power – up to 10 times cheaper than gas.
RenewableUK’s chief executive Dan McGrail said, “This windfall tax on low carbon power risks deterring investment, at a time when the Chancellor should be incentivising clean energy. Unlike in oil and gas, under this levy companies which are making significant investments in renewables will get no tax relief and will be hit by a higher windfall rate.
“Any new tax should have focussed on large, unexpected windfalls right across the energy sector, instead profits at fossil fuel plants are inexplicably exempted from the levy. Many renewable generators are on long-term, fixed price contracts and most others sold their power for this winter over a year ago, so they haven’t been making excess profits.”
Renewable energy generated 40% of the UK’s electricity in 2021, more than half of which came from onshore and offshore wind. Wind alone generates enough electricity to power more than 20 million UK homes all year round.
McGrail added:
“We need to attract more than £175bn in new wind farms and our supply chain over the course of this decade, so we need to make the UK one of the most attractive destinations for private investment in renewables. Ministers now need to work with the industry to ensure that the implementation of these plans ensures a level playing-field, rather than imposing unfair burdens on renewables.”
