Energy firms warn against extending windfall tax to renewables

Renewables making excessive profits linked to booming energy prices? Say it isn’t true!
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Energy firms are warning that an attempt to extend a windfall tax to renewable energy would threaten the government’s entire energy strategy, says BBC News.

Industry sources told the BBC it could destroy investor confidence ahead of key auctions for licences to develop new wind and solar projects.

Shares in firms that could be affected fell sharply on Tuesday, with Centrica down 11% and SSE 9% lower.

An announcement on windfall taxes could come as soon as Thursday.

However, the Treasury said no decisions had yet been made.

Oil and gas prices have soared over the past year, partly because demand has increased as the world emerges from the Covid pandemic and because of supply concerns due to Russia’s invasion of Ukraine.

The possibility that a windfall tax could also hit electricity generators, including renewable energy operators, was first reported by the Financial Times.

Sources close to the Treasury’s thinking on how to impose a windfall tax point out that renewable and nuclear energy generators have also enjoyed windfall profits as electricity prices have also surged and they have enjoyed extra profits as they are not dependent on expensive gas to produce power.

“Power producers whose costs haven’t risen with the price of gas have enjoyed a windfall as well. It is logical and credible for them to be taxed on their excess profits as well,” said one source.

Full article here.