UK Imposes New 'Windfall Tax' on Renewable Energy Companies

Earlier this year, the UK government imposed a windfall tax on oil and gas companies in the country.

Renewable power companies in England and Wales are expected to have their revenues capped thanks to the latest initiative of the UK government.

According to The Guardian, the new temporary “cost-plus revenue limit” for renewable and nuclear electricity generators in the regions in question is expected to come into force at the start of next year and is supposed to allow the generators to “cover their costs, plus receive an appropriate revenue.”

This measure was included in the new energy prices bill rolled out by Liz Truss’ government that “limits power prices for households at an average of £2,500 a year and is estimated will cost taxpayers about £89 billion.”

As it has been estimated that taxing power generators such as wind and solar farms could raise from £3-4 billion, it might help offset some of the cost incurred by the bill, the newspaper notes.

Tom Glover, multinational energy company RWE’s UK Country Chair, has already described this move as a "de-facto windfall tax on low-carbon generators," according to Reuters.

Earlier this year, Boris Johnson’s government also imposed a windfall tax on oil and gas companies in the country, and Truss, his successor, initially appeared reluctant to follow the calls to do the same to the power generators, The Guardian points out.

“After months of telling the country they were utterly opposed to the principle of a windfall tax, they have been dragged kicking and screaming to implement it,” said Ed Miliband, UK Shadow Secretary of State for Climate Change and Net Zero. “Yet again this shows Labour leading the agenda in British politics with another screeching U-turn from a government in office but not in power. But the government’s delay in acting will have cost billions and the public will pay the price.”

Meanwhile, a source in the industry said the government’s move is “another U-turn as it’s 100 percent a windfall tax from the people that said they would never do one.”