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Thursday, February 2, 2023

UK renewable energy companies to fight government

Greater Renewable Energy Industry Britney He will meet the Treasury on Friday to air his grievances over Britain’s decision to impose an unexpected tax on low-carbon electricity generators.

Bosses of some of the UK’s biggest energy producers will meet with Treasury officials and discuss a tax on “surplus profits” announced by the government. hacienda, Jeremy Hunt, according to people familiar with the matter, who asked not to be named because the meeting is private. The tax threatens to curb investment in a sector that is vital to weaning Britain off dependence on fossil fuels.

The renewable energy industry is particularly affected by the perception that better deals are being offered to oil and gas companies, who could benefit from investment allocations encouraging new production in the North Sea. In the first three years of the windfall tax, the Treasury expects it to collect 20% more revenue from low-carbon energy producers than from the oil and gas sector, although fossil fuel companies could pay more over a lifetime. Measures based on market prices.

Keith Anderson, chief executive of Iberdrola SA’s ScottishPower unit, said in a statement: “I don’t understand why renewable energy is taxed at the same level as oil and gas and why those companies need to invest in more fossil fuels.” Additional incentives are given for. Statement. , “It looks like a recession created by gas, but a recovery for which renewable energy will pay.”

The measure would impose a 45% tax on any income from low-carbon electricity sold for more than £75 per megawatt hour. This is less than half of this year’s average wholesale price, but well above normal levels before the current energy crisis.

Read: UK gives windfall tax to energy companies to fund bill cap

The measure will not apply to producers who have contracts with the government to sell energy at fixed prices. Companies can also offset their tax burden by deducting investment costs from their corporate tax.

The meeting on Friday morning will be attended by the CEOs of SSE plc and Drax Group plc, as well as the British directors of Danish wind giant Ørsted A/S and Germany’s RWE AG.

SSE CEO Alistair Phillips-Davies said in a statement the company looked forward to hearing more from the government on how it would support investment in clean energy, which the UK needs to reduce reliance on expensive imported gas. RWE UK Country President Tom Glover criticized the move.

“Intervention of this scale undermines the basis on which investors finance renewable projects in the UK,” Glover said in a statement. “Undermining investor confidence will make it harder for the UK to meet its net zero decarbonisation commitments, the UK’s energy supply will be less secure and UK customers will ultimately pay more in the long term.”

The rationale behind this measure is that low-carbon generators can sell electricity at market prices set by natural gas plants without paying higher fuel costs.

The windfall tax will run until 2028. This is longer than a similar measure in the European Union, which could boost investment in the continent for years to come.

“It must be remembered that averting the climate disaster and achieving UK energy independence require significant investment in the UK electricity system,” said Sam Hollister, Director of Markets & Engagement at LCPLane Clarke & Peacock LLP. “Targeting established investors through an ‘electricity generator tax’ could have a significant impact on meeting those ambitions, both directly and indirectly by damaging investor confidence.”

World Nation News Desk
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