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UK policy changes: windfalls and renewables

It’s been a wild year politically in the UK. After a period when
windfall taxes were resisted, we ended up with a government which bowed to
them- as did most of the EU. And they even got extended to cover power.
Chancellor Jeremy Hunt hit electricity generation companies with a 45%
Energy Electricity Generator Levy, on their ‘excess returns’ as he
attempted to fund measures to ease the cost of living crisis.

That was in addition to the existing windfall tax on North Sea oil & gas operators
which is to be raised from 25% to 35% and extended by 2 years until 2028.

Renewable energy suppliers that operate under the Contracts for Difference
system are exempted from the new electricity tax, but not those who are
operating under the Renewables Obligation (RO). So they will be hit quite
hard- they had after all enjoyed a significant wind fall since the RO
subsidy level was high, based on the assumption that gas was cheap. It no
longer is.

There will now be an incentive to shift from RO support to CfDs,
but this may not be easy for some companies. Chris Hewett, Chief Executive
of Solar Energy UK, said: ‘The Chancellor should be taking every
opportunity to encourage investment in clean energy.

Yet, there will be no tax relief for companies investing in meeting the government’s target of
70GW of solar capacity by 2035 – unlike investments in oil and gas
production, which will be taxed less than fossil-free generators.’ A
swifter move to decarbonised energy would have avoided the dire
consequences we are seeing now.’ Fair enough.

But that doesn’t mean opting for costly and slow to deploy nuclear decarbonisation. It means
getting on with lower cost renewables fast and adjusting the wind fall
taxes and CfD system to that end. And of course cutting back on energy
wastage where ever possible.

The government is getting side-tracked by its
nuclear obsession, with its newly created development outfit ‘Great
British Nuclear’ expected to triple UK nuclear capacity by 2050 – getting
to 24GW, with 20-30 SMRs and 4-6 new large reactors. Hard to believe. But
so is backing a new coal mine. Let’s hope 2023 makes more sense

 Renew Extra 10th Dec 2022

https://renewextraweekly.blogspot.com/2022/12/uk-policy-changes-windfalls-and.html

December 12, 2022 - Posted by Christina Macpherson | politics, UK