Press release from RenewableUK

As part of the new Energy Prices Bill, the Government has announced it will legislate for a Cost-Plus Revenue Limit, which will act as a cap on revenue renewable generators can receive. The Government has not set out what level the limit will be set at but is considering ‘pre-crisis expectations for wholesale prices’, nor has it specified how long the measure would be in place for.

The Government is proposing that the Cost-Plus Revenue Limit will apply to renewable generators that are outside of the fixed-price Contracts for Difference (CfD) scheme – mainly older wind and solar energy projects – and will consider whether it will apply to nuclear and biomass generation.

The Bill will also enable Ministers to bring forward a scheme for older renewable generators to move from the legacy Renewables Obligation subsidy to new CfDs, something the industry has lobbied for in response to the gas crisis.

Reacting to the Energy Prices Bill, RenewableUK’s CEO Dan McGrail said:

“We are concerned that a price cap will send the wrong signal to investors in renewable energy in the UK. A price cap acting as a 100% windfall tax on renewables’ revenue above a certain level, while excess oil and gas profits are taxed at 25%, risks skewing investment towards the fossil fuels that have caused this energy crisis.

“This decade we need to attract £175bn of investment in secure, domestic wind power and we can already see the investor turmoil that the EU’s proposed price cap is causing in the European market. Industry will continue work with Government on policies to help cut consumer bills and safeguard investment. As such, to limit the negative impacts, it is essential that a cap is set at a level that doesn’t make the UK less attractive to investors than the EU, is technology neutral and has a clear sunset clause in place.

“Most wind generators sell their power a year or more in advance at prices that are a fraction of the record high market prices being set by gas. These hedging arrangements for wind power will help to keep electricity prices lower for consumers this winter, and the price cap must not undermine these arrangements.

“Industry has been proactive in proposing new fixed price contracts to cut costs and provide long-term, low-cost power for consumers. We welcome the inclusion of this proposal in the Bill, and it is vital that the scheme is developed rapidly so that industry can plan for new contracts and consumers can be confident that they are getting maximum benefit from cheap renewables.”

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