Energy UK has warned that a windfall tax could impact the UK’s long-term energy plans by increasing costs to customers and risking delivery of the government’s own energy security strategy.
The strategy, released in April, sets out government 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.
In a new report, Energy UK highlighted the billions of pounds of investment made by electricity generators – as well as their future spending plans and projects – as they expand the country’s sources of low carbon energy while creating jobs, growth and other economic benefits.
These investments have helped transform the UK energy system to a point where the majority of the electricity comes from low carbon sources and developed renewables as the cheapest source of power, as well as creating jobs, growth, and economic co-benefits across the country, Energy UK said.
Energy UK deputy director Adam Berman 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.”