The government risks “mothballing multi-billion pound infrastructure projects” if it persists with the windfall tax on electricity generators, argued the boss of an established domestic green energy producer.
Rod Wood, managing director of Community Windpower – which has a portfolio of wind and solar operations across the UK – told City A.M. that green investment would be diverted to the US and Europe unless it improved the investment environment for clean energy projects.
Wood said: “Green investment, and thousands of linked high-quality jobs, will simply be diverted to the US or Europe where investors are being welcomed with open arms.”
He urged Downing Street to guarantee new developments would not be included in the tax, and for investment relief to be introduced on the same terms as the UK’s Energy Profits Levy on North Sea oil and gas operators – which offers 91 pence in the pound rebate for companies developing projects domestically.
Last August, the US passed the Inflation Reduction Act, which included $391bn in subsidies for green energy projects – catching the attention of nascent green energy companies – while the EU is scrambling to respond with plans to loosen subsidy rules and state support restrictions for renewable projects.
By contrast, Chancellor Jeremy Hunt brought in the Electricity Generator Levy, a 45 per cent tax on clean energy producers operating under legacy contracts – when electricity is being sold at over £75 per MWh.
“Make no mistake, we are in the midst of a renewable energy ‘arms race’. The US and EU are doing all they can to attract investment in renewables, yet the UK appears to be doing all it can to deter it,” he explained.
The managing director revealed his own green energy aspirations were in jeopardy, with Community Windpower having to reassess plans to invest in three North Sea projects with a combined value of £2bn.
CBI pushes for green energy investment relief
His comments follow the latest budget proposals from the Confederation of British Industry (CBI) ahead of Hunt’s fiscal statement next month.
The UK’s biggest business lobby group has urged the government to supercharge competitiveness in green energy markets and bring in an investment allowance for the EGL.
It further calls on the government to approve financing plans for hydrogen, boost carbon capture and storage projects, and establish a route for funding small modular reactors (SMR) to ensure at least one nuclear SMR can green-lit in the next parliament.
Wood said: “While we fully support the CBI’s call to introduce an investment allowance under the EGL, this in itself is not enough for the UK’s renewable energy sector to survive.”
He feared that the “UK’s renewable energy sector hangs in the balance” if the Government “doesn’t listen to industry and adjust the EGL.”
“Our alternative proposals, submitted to government, offer a way to ensure revenues are raised whilst protecting our low carbon energy sector,” he argued.
The government has been approached for comment.