- The REA highlights industry concern regarding the impact of
the Electricity Generator Levy as draft legislation is published;
- REA recognises the importance of renewables playing their
part, however the Levy must be appropriately designed to avoid
serious market disruption, potentially impacting security of
supply and UK’s ability to decarbonise;
- Levy already having severe effects on the sector, with
evidence of hundreds of millions of pounds of low carbon
investment having stalled;
- It currently remains unclear why the renewables sector is
being treated differently to the oil and gas
sector.
The Association for Renewable Energy and Clean Technology (REA)
has warned that the Government’s Energy Generator Levy (EGL)
plans has put hundreds of millions of pounds of investment at
risk. Impacts on the UK’s long-term energy security, cost to bill
payers and the ability to reach Net Zero are now expected.
The REA and our members recognise that the British public are
facing very challenging times. The renewables sector is willing
and ready to play its full part in addressing the energy crisis,
and our attempts to mitigate the impact of the EGL have been
taken on board by government through moves on exceptional costs
and indexation.
However, the sector is key to tackling the volatile costs of
fossil fuels at the heart of rising energy bills, and its
treatment must be fair and equitable in relation to the oil and
gas sector. Under no circumstances should the EGL risk the
solvency of businesses that have such a vital role in our
long-term energy security.
In particular, the REA now urges government to provide investment
allowances within the EGL to the renewables and clean technology
sector as already awarded to the oil and gas sector in the
comparable Energy Profits Levy. Failing to do so risks
undermining much needed investment crucial for renewable energy
and clean technology investment to achieve Net Zero. It currently
remains unclear why the renewables sector is being treated
differently to the oil and gas sector.
The impact of the proposed levy is already being felt across the
sector. Surveyed members indicate that since the announcement of
the levy in the Autumn Statement, investment pipelines for
critical low carbon renewables and clean technology have been
paused, putting hundreds of millions of pounds of potential green
investment at risk. Such sites include solar sites, hydrogen
production facilities, heat networks and bioenergy carbon capture
projects - amongst REA members alone.
With the Government today laying out the legislation for the
levy, the REA welcomes the constructive revisions in the form of
covered exceptional fuel costs and the benchmark price indexed to
CPI, two mechanisms the REA repeatedly advised would mitigate
negative impacts of the levy. Despite these small positives, the
REA stresses that the lack of investment allowances for
renewables, despite their provision to the fossil energy industry
is simply not aligned with the UK’s net zero ambition and is
stalling hundreds of millions of pounds of low carbon investment.
Frank Gordon, Director of Policy at the
Association for Renewable Energy and Clean Technology (REA),
said:
“While the REA and its members recognise the immense economic
challenges facing this country, we would question the wisdom of
subjecting cheaper, greener renewable power sector to a more
punishing tax system than its oil and gas counterparts.
“We strongly urge the Government to fix this disparity by
providing a tax relief for low carbon investments as part of the
Electricity Generator Levy design. As is already in place for the
oil and gas sector in the Energy Profit Levy. This is crucial for
getting investments in renewables moving again following the
pause that resulted from the last few months of political and
policy uncertainty.
“In the short term, renewable generators can help address
this energy crisis by helping keep the lights on this winter, and
the REA welcomes the moves on exceptional costs and Indexation,
which will mitigate some negative impacts of the levy. In the
long-term, renewable generators will provide the UK with
homegrown, low-carbon energy, not only providing us with energy
sovereignty, but also providing us with much needed economic
growth. The market value of the renewables industry is set to
more than double to £46bn by 2035.
“The REA is now urging the Prime Minister and Chancellor of
the Exchequer for further clarity on the levy, and to ensure that
any mechanism used to raise funds from the renewable energy
sector is fair, equitable and supports our sector to grow.”
Mark Silvester, Chief Executive Officer at Enovert,
added:
“Enovert is a long-established investor and operator of
renewable energy assets in the UK. Enovert has a pipeline
of renewable energy assets under development - typically in
partnership with local authorities, landowners or
energy-intensive users that are keen to reduce their carbon
footprint. The EGL risks undermining confidence and restricting
future investment in new renewable energy assets.”
