UK's Green Energy Sector Hangs in the Balance with Multi-Billion Pound Ventures in Jeopardy
A major investor has cautioned that Westminster's involvement in the electricity sector could result in the suspension of multiple multi-billion pound renewable energy initiatives.
Community Windpower has expressed that the US and EU are attempting to pull in investments into renewable energy, however, the UK is attempting to hinder this by instituting the electricity generator levy (EGL).
The implementation of the policy has caused the UK to lag behind in the international competition for renewable energy.
A collective of energy-related trade associations recently aired concerns regarding the EGL, and the company mirrored these worries.
Five organisations - which between them represent more than 750 firms - have highlighted to the Chancellor that the UK's desirability as an investment option for green energy is "severely threatened" in a letter.
In their entreaty to Jeremy Hunt, they asked him to make green growth a priority in his forthcoming spring budget.
The autumn budget of Mr Hunt revealed the introduction of a green energy windfall tax, which will enter into effect in the beginning of 2023 and will require a 45% levy to be paid on all "extraordinary profits".
If corporation taxes are included, then the EGL leads to a 70% tax rate on the earnings of renewable energy firms, without the same benefits given to oil and gas firms.
Developments that have a contract for difference (CFD) will not be affected, since they are usually more recent plans.
The firm Community Windpower, which has a £2 billion investment in more than 1.5GW of UK onshore wind energy, had threatened a legal action against the UK Government in relation to the EGL.
A competition to develop new weapons can be referred to as an 'arms race'.
Rod Wood, the managing director of Community Windpower, commented that a competition of sorts has commenced in regards to renewable energy. He explained that the US, EU, and other countries have been actively attempting to attract investments in this field, while the UK has been discouraging it.
A number of multi-billion pound infrastructure programs, including our own, might be put on hold by the present propositions. Investment in green energy, along with thousands of associated good-quality job opportunities, would then be sent off to the US or Europe where investors are being warmly accepted.
In 2019, the US made their intentions to invest in green energy clear with the Inflation Reduction Act, which outlined their plan to spend an estimated £300bn on renewable sources.
The EU Green Deal Industrial Plan is anticipated to generate €250bn for the enlargement of the EU's industrial capabilities.
According to Community Windpower, the current UK policies are not conducive to investing in renewable energy, as there are no incentives for it.
The need for three distinct things is present.
For the purpose of being able to keep up with other countries' efforts in the energy transition, the company proposed three requests to the government.
A demand has been made for a "comparable package of financial resources for low carbon energy investments" to be implemented, as well as for the EGL to be taken away from green projects, such as solar and onshore wind.
Government should introduce an 80% allowance for investments in order to stimulate global capital to sink money into the UK, according to Community Windpower.
According to Mr Wood, they are requesting that the Government should not count fresh clean energy projects in the EGL, and a 80% Investment Allowance should be put in place that is similar to the one for oil and gas.
We are in agreement with the CBI's request to introduce a financial allowance in accordance with the EGL; however, this action alone is insufficient for the renewable energy sector in the UK to remain viable.
The future of renewable energy in the United Kingdom depends on the authorities heeding the advice of the industry and reevaluating the Energy Guarantee Levy.
We put forward alternative plans to government that guarantee higher income for the sustainable energy sector while keeping emissions to a minimum.
The entire industry, ranging from Trade Bodies to the Confederation of British Industry, stands behind our approach.
A spokesperson from HM Treasury commented that the Energy Generator Levy is only a short-term solution and not intended to punish electricity generators. This was their response to certain electricity producers reaping substantial profits due to unforeseen geopolitical developments.
For our long-term energy security to be maintained, it is essential that producers in the industry keep investing, and this levy allows them to benefit from the higher prices in the wholesale market.