Chancellor Jeremy Hunt unveiled the windfall tax with his Autumn Statement on 17th November, which has been criticised by the solar sector. The renewable energy industry is concerned that this could have a negative impact on the solar sector.
Last Thursday, 17th November, the Electricity Generator Levy was announced within the Autumn Statement, after weeks of speculation. This levy is set at a rate of 45% on "extraordinary returns from low-carbon UK electricity generation". Overall tax will be much higher, as it's not deducted from profits subject to Corporation Tax, so in effect, the rate is 70%.
When unveiling the Autumn statement, Chancellor Hunt stated that “now would be the wrong time to step back from our international climate responsibilities”, however, it could be argued that the tax contradicts this statement.
Firstly, the tax will not apply to the UK's coal and gas power stations, leaving them to pay a lower rate of 35% - a smaller increase from the 25% rate that was introduced in May in the Energy Profits Levy.
It could therefore be argued that the Electricity Generator Levy could slow investment in renewable energy, and leaves the carbon intensive electricity generators unaffected.
The recent energy price hikes are largely caused by the UK's reliance on gas, which has backfired and damaged the country's economy. Had we moved to greener energy sources sooner, we may not have been in the situation we find ourselves in now.
Here at Volta Green Energy Ltd, we believe that the Chancellor should be encouraging investment in clean energy. The latest statement provides no tax relief for businesses that want to meet the government's target of 70GW of solar capacity by 2035, and investments in oil and gas energy production are being taxed less than fossil-free electricity generators.
Despite the concerns, there are still some positives for the solar energy sector - especially the announcement of £6 billion in funding for the energy efficiency sector, starting in 2025. We look forward to hearing more about these initiatives, but until then, look forward to supporting our customers in their journey to becoming green and utilising the power of solar panels and solar battery storage.
If you'd like to find out more about solar panels, please feel free to contact us > https://www.voltagreenenergy.co.uk/solar-panels
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