Thursday 13 October 2022

Government confronts criticism over cap on renewables’ revenues

The government has denied that the new plan it has announced as part of its Energy Prices Bill is equivalent to a windfall tax.

Ministers said a temporary “Cost-Plus Revenue Limit” in England and Wales would be introduced to curb the amount generators can make.

The industry has raised concerns over the impact of the measure on long-term green investments, with Tom Glover, RWE UK Country Chair, saying that a cap "is a de-facto ‘windfall tax’ on low carbon generators".

Claire Mack, Chief Executive of Scottish Renewables, said: "The cap which is suggested as part of the Energy Prices Bill will act as a 100% windfall tax on renewable generators above a certain as-yet unspecified level.

"At the same time, excess oil and gas profits have been levied with a surcharge of just 25% and the investment allowance given to oil and gas companies offers a huge incentive to invest in the energy sources which are at the root of the price crisis."

In an interview with Times Radio, Business Secretary Jacob Rees-Mogg said: "I don't think anyone in their right mind would call it a windfall tax.

"The intervention in the market is done on the basis of limiting the gas price, which feeds through to the electricity price. This feeds through to participants within the market.

"So, if we had capped the wholesale price of gas rather than the retail price of gas, this would have affected the renewable energy generators anyway."