Trade association Energy UK has warned of the impact a windfall tax could have on the UK’s long-term energy plans “by increasing costs to customers and risking delivery of the UK government’s own energy security strategy.”
Energy UK said a windfall tax on generators could delay and raise the cost of investments — and “jeopardise our pathway to energy security, Net Zero, and reliable low-cost electricity.”
The UK government strategy, released in April, sets out plans to rapidly grow the UK’s low carbon generation capacity and ensure the country has its own reliable sources of power in the face of international supply disruption.
It included ambitious targets such as expanding offshore wind capacity by almost 400% in only eight years, which will require billions of pounds of private sector investment.
Energy UK represents major companies including Perth-based SSE as well as EDF Energy, Centrica and RWE.
Energy UK highlighted in a document the billions of pounds of investment made by electricity generators — as well as their future spending plans and projects.
Energy UK said the industry is investing more than £100 billion over the course of this decade in new energy sources.
It said the UK’s electricity industry delivers around £83 billion in economic activity through its supply chain and interaction with other sectors, invests over £10 billion annually, and pays over £4 billion in taxes to the UK Treasury.
It said power generation is responsible for almost 50,000 jobs, a number that will increase substantially over the coming years.
Adam Berman, Deputy Director, Energy UK said: “The next decade will be critical in ensuring sufficient investment to reach both our climate change and domestic energy security targets.
“Generation is a long-term industry, with investment horizons that span decades and a windfall tax on generators could delay and raise the cost of these investments – at the very time that we need to increase spending to meet the Government’s own aims.
“Customers are facing a cost-of-living crisis that has been driven by international gas prices so – while the support package announced recently was very welcome – we also need to be very careful of any actions that could inadvertently push up the cost of investing in new generation, forcing consumers to pay higher energy bills for longer.
“Generators have already invested billions of pounds of investment and, given the right framework, are ready to deliver billions more to help the country reach its climate change targets and reduce our dependence on the volatile fossil fuel prices that are causing record energy costs for customers at present.
“We need to make investment in cheap, clean, domestic generation easier – not harder – and with electricity demand set to double by 2035, a windfall tax would jeopardise our pathway to energy security, Net Zero, and reliable low-cost electricity.”