45% windfall tax on renewable electricity from 1 January 2023
A new electricity generator levy will come into force from 1 January 2023 and run until 31 March 2028. The levy will be a new 45% tax on extraordinary revenues above a pre-crisis price baseline of £75 per MWh made by certain renewable, nuclear and biomass electricity generators. The measure will exclude generation that falls under the Contracts for Difference (CfD) regime and will also include a small de minimis to exclude small generators from the levy.
The share prices of Bluefield Solar, Downing Renewables and Infrastructure, Foresight Solar, NextEnergy Solar, Greencoat UK Wind and The Renewables Infrastructure Group appear to be up on the day.
The tax will be limited to generators whose in-scope generation output (generation from non-fossil fuels, we think) exceeds 100GWh across a period and will only then apply to extraordinary returns (revenue above the £75/MWh limit) exceeding £10m.
We talked to Downing Renewables and Infrastructure and they think that their UK generation assets would not be affected.