Energy firms warn against extending windfall tax to renewables

Posted: May 25, 2022 by oldbrew in Energy, government
Tags: ,

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Renewables making excessive profits linked to booming energy prices? Say it isn’t true!
– – –
Energy firms are warning that an attempt to extend a windfall tax to renewable energy would threaten the government’s entire energy strategy, says BBC News.

Industry sources told the BBC it could destroy investor confidence ahead of key auctions for licences to develop new wind and solar projects.

Shares in firms that could be affected fell sharply on Tuesday, with Centrica down 11% and SSE 9% lower.

An announcement on windfall taxes could come as soon as Thursday.

However, the Treasury said no decisions had yet been made.

Oil and gas prices have soared over the past year, partly because demand has increased as the world emerges from the Covid pandemic and because of supply concerns due to Russia’s invasion of Ukraine.

The possibility that a windfall tax could also hit electricity generators, including renewable energy operators, was first reported by the Financial Times.

Sources close to the Treasury’s thinking on how to impose a windfall tax point out that renewable and nuclear energy generators have also enjoyed windfall profits as electricity prices have also surged and they have enjoyed extra profits as they are not dependent on expensive gas to produce power.

“Power producers whose costs haven’t risen with the price of gas have enjoyed a windfall as well. It is logical and credible for them to be taxed on their excess profits as well,” said one source.

Full article here.

  1. oldbrew says:

    Looks like renewables profits are out of bounds…

    But proposals to tax income from other electricity producers, such as some older windfarms and nuclear plants which have also seen windfall gains, have been shelved.

  2. Phoenix44 says:

    So windfall taxes destroy investor confidence when it’s things the BBC likes but not when it’s things they don’t.

    Well I never.

  3. oldbrew says:

    Just announced:
    ‘There will be a temporary windfall tax on the profits of oil and gas companies at a rate of 25%.’
    – – –
    Windfall tax ‘damaging’ for net zero plans and energy security, businesses say
    Thursday 26 May 2022

    They were never going to say they liked the tax, but they must have liked the windfall.
    – – –
    Report, 1st May…

    Asked on Sky about Sunak’s views, Kwarteng said: “He is the chancellor of the exchequer, he is responsible for tax policy. From my point of view, I want to see investment in the North Sea.”

    Questioned about whether he disagreed with Sunak, Kwarteng said: “My view is that, and I’ve said this publicly many times, a windfall tax will act as a disincentive to invest and we want to see investment.” [bold added]

  4. Chaswarnertoo says:

    HMG has a strategy? Could have fooled me.

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