Why renewables hit hard today?

[dundas666]

Anyone know why the renewable energy ITs have been hit so hard today?

UKW Greencoat UK Wind down 6%, JLEN, Renewables Infrastructure Group (TRIG) and NextEnergy Solar (NESF) all down more than 4%

[BullDog]

Anyone know why the renewable energy ITs have been hit so hard today?

UKW Greencoat UK Wind down 6%, JLEN, Renewables Infrastructure Group (TRIG) and NextEnergy Solar (NESF) all down more than 4%

Windfall tax on electricity generation, including wind farm operators, apparently.

[dundas666]

Anyone know why the renewable energy ITs have been hit so hard today?

UKW Greencoat UK Wind down 6%, JLEN, Renewables Infrastructure Group (TRIG) and NextEnergy Solar (NESF) all down more than 4%

Windfall tax on electricity generation, including wind farm operators, apparently.

Ah, ok thanks BullDog

[BullDog]

Anyone know why the renewable energy ITs have been hit so hard today?

UKW Greencoat UK Wind down 6%, JLEN, Renewables Infrastructure Group (TRIG) and NextEnergy Solar (NESF) all down more than 4%

Windfall tax on electricity generation, including wind farm operators, apparently.

Ah, ok thanks BullDog

More than welcome

[richfool]

I was about to ask the same question, several of mine down 2+ and 4+ percent. That's quite a big drop for companies normally with very stable prices.

Is this a one-off or new ongoing tax? What about the big oil companies?

[airbus330]

https://www.heraldscotland.com/news/hom ... price-cap/

Sorry paywalled. But, basically, a fairly predictable grab at the energy generators. How much traction it gets will possibly depend on how many wind farms/solar farms the government wants built for energy security.

[mc2fool]

A simple google for windfall tax on generators turns up lots of topical articles.

In the grand scheme of windfall taxes (no politics here remember!) it's fair enough, as the price that generators get on selling their electricity to the grid (and hence, to consumers) is driven by the cost of gas generation of electricity, irrespective of the source "fuel", so as a result of the huge increase in gas prices the wind, solar, hydro, etc generators have seen a huge hike in profits; a windfall indeed.

[bruncher]

I am wondering how the tax will work. Will it be imposed solely on UK registered companies? If so, will the 'excess' profits on overseas 'windfalls' be taxed, or just the windfalls on UK assets? What about foreign-registered companies with UK assets?

[Dod101]

If indeed there is a windfall tax on electricity generators that would just be stupid. SSE for instance has recently announced a cut in its dividend to fund expenditure on renewables. Provided the companies involved are investing to help secure our energy supplies here and not paying it out as dividends I can see no reason to tax their windfall profits.

Dod

[UncleEbenezer]

Aha! We can't be seen to capitulate and adopt yet another Labour Policy we rubbished, so we have to be seen to vary it: do something different.

North Sea oil and gas assets are kind-of straightforward to scope out. Broaden the tax and it becomes harder: what's in-scope for a tax? Unless of course you just make it a tax on all supply to UK customers ...

Will this extend so far as to kill off renewables early-stage/R&D projects?

[UncleEbenezer]

Thought experiment: should the windfall tax extend to homeowners with solar panels?

That would be directly equivalent to taxing all those wind and solar farms: a retrospective change to the contract. Arguably far more justified: people with a roof to install solar panels are both richer than mere investors and (at least those in receipt of FITs) far more highly-rewarded by the old incentives.

Politically perhaps a bit different?

[airbus330]

Thought experiment: should the windfall tax extend to homeowners with solar panels?

That would be directly equivalent to taxing all those wind and solar farms: a retrospective change to the contract. Arguably far more justified: people with a roof to install solar panels are both richer than mere investors and (at least those in receipt of FITs) far more highly-rewarded by the old incentives.

Politically perhaps a bit different?

Might have some legs on it, but for the fact that FIT/SEG tariffs (currently about 6p/kWh exported) have not risen anything like as much as the retail price (c31p/kWh) of leccy. In fact, there is a good argument that the energy companies are getting a highly subsidized lunch from solar panel owners!

[Hallucigenia]

This thread gives a good idea of some of the intricacies - the people on RO are making out like bandits, there's a good argument for making the RO negative at the moment...

https://twitter.com/Adam_Grant_Bell/sta ... 2065765382

[EthicsGradient]

No windfall tax on wind or solar generators yet, but it's under review:

And we understand that certain parts of the electricity generation sector are also making extraordinary profits.

The reason for this is the way our market works.

The price electricity generators are paid is linked not to the costs they incur in providing that electricity…but rather to the price of natural gas – which is extraordinarily high right now.

Other countries like France, Italy, Spain and Greece have already taken measures to correct this.

As set out in the Energy Security Strategy, we are consulting with the power generation sector and investors…

…to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.

Those reforms will take time to implement.

So, in the meantime, we are urgently evaluating the scale of these extraordinary profits…and the appropriate steps to take.

https://www.gov.uk/government/speeches/ ... ng-support

[richfool]

I was researching whether renewable energy is going to be subject to the chancellor's "windfall tax" on gas and oil companies, and came across this, which may be of general interest:

https://notalotofpeopleknowthat.wordpre ... more-56692

[BullDog]

I was researching whether renewable energy is going to be subject to the chancellor's "windfall tax" on gas and oil companies, and came across this, which may be of general interest:

https://notalotofpeopleknowthat.wordpre ... more-56692

I believe the answer is "yes we will tax them, but we haven't quite figured out how to tax renewable energy generation without looking massive hypocrites".

[monabri]

I was researching whether renewable energy is going to be subject to the chancellor's "windfall tax" on gas and oil companies, and came across this, which may be of general interest:

https://notalotofpeopleknowthat.wordpre ... more-56692

I believe the answer is "yes we will tax them, but we haven't quite figured out how to tax renewable energy generation without looking massive hypocrites".

didn't you forget the words

"this week" at the end of your sentence?

[Walkeia]

Would it not be fair to offer renewables the same deal. I hold renewables trusts but would be happy to see the excess profits invested for the long term future.

[richfool]

This may be of interest:

Windfall tax confusion shows UK is a risk for renewables investors
7 June 2022
Uncertainty over the government's levy on oil and gas companies provided a buying opportunity for our columnist in one leading renewables fund, but left him wondering where the government is going in its clean energy policy.

https://www.theaic.co.uk/aic/news/cityw ... renewables