Wind turbines and neighbours. Author: Evert Kuiken.
After the UK government this week proposed a revenue cap for renewable generators as part of its new Energy Prices Bill, industry group RenewableUK voiced concerns that it will “send the wrong signal” to renewable energy investors in the country.
“A price cap acting as a 100% windfall tax on renewables’ revenue above a certain level, while excess oil and gas profits are taxed at 25%, risks skewing investment towards the fossil fuels that have caused this energy crisis,” said RenewableUK chief executive Dan McGrail.
The Association for Renewable Energy and Clean Technology (REA) echoed these comments. “Any measures on the renewable energy and clean technology generators must be commensurate with the arrangements on oil and gas companies, who face a 25% profit (not revenue) levy but one they can offset against investment,” said its chief executive Nina Skorupska.
The REA is also concerned that the Cost-Plus Revenue Limit could undermine investment and certainty at the time when record investment is needed to achieve net zero goals.
The precise scope of the measure is yet to be decided as is its level, although, as RenewableUK noted, the government is considering “pre-crisis expectations for wholesale prices.”
McGrail warned that “to limit the negative impacts, it is essential that a cap is set at a level that doesn’t make the UK less attractive to investors than the EU, is technology neutral and has a clear sunset clause in place.”
RenewableUK reiterated its support for plans for new fixed price contracts for older renewable generators as part of the response to the energy crisis.
Solar Energy UK also expressed concerns over the revenue cap.
“The UK solar industry is concerned that a windfall tax on revenue from existing renewable generators has been announced in haste, whilst many of the details are still to be worked out, particularly for small generators who have been excluded from ministerial discussions so far,” said the organisation’s chief executive Chris Hewett.
“This gives another very poor signal to international investors in renewables in the UK, on the back of speculation of restrictive planning rules for solar farms being pursued by Defra [Department for Environment, Food & Rural Affairs],” he added.
Earlier this week, the Guardian reported that ministers seek to restrict solar panels from most of the farmland in England. Solar Energy UK issued a statement opposing these plans.