Community Windpower is calling on the UK government to urgently engage with the renewables industry to avoid legal action linked to its Electricity Generator Levy (EGL).
The EGL, designed to target “extraordinary profits”, applies to revenue above a threshold of £75/MWh despite the “breakeven” rate for a new onshore wind project calculated as £83/MWh, the developer said.
There is no mitigation to the levy, which makes investing in new renewable projects almost impossible, it added.
Furthermore, Community Windpower said last month’s much derided “Green Day” offered nothing for renewables despite further government giveaways for the oil and gas sector.
Law firm Mishcon de Reya has already been instructed to explore legal options linked to the “discriminatory” nature of the EGL, it said.
Ministers are being told that a failure to consider reasonable amendments to the EGL, as the Finance Bill moves through Parliament, will result in legal proceedings, according to the developer.
The amendments suggested include excluding new renewable developments from the scope of the levy; indexing the threshold price for the EGL from January 2022; and include an investment allowance in line with the oil & gas sector.
Community Windpower managing director Rod Wood said: “The government has simply refused to engage on the EGL over recent months and ministers seem oblivious to the very real damage that this discriminatory and regressive levy will do to the UK renewables sector.
“At the same time, government has given the oil and gas sector a double dip of £20bn in subsidies and an 80% windfall tax write off.
“There is still time to make minor amendments that will make minimal difference to the tax take but have massive impacts on the future of this sector.
“Without changes to the EGL, shovel ready projects simply will not get built and UK PLC will miss out on £10bn of related tax revenue.
“Reliance on hydrocarbons is what caused this energy crisis. The solution is renewables; wind is clean, secure and popular with the public.
“We’re standing by to take the strongest possible legal action if the government puts UK energy security and climate change targets at risk through this discriminatory policy.”