John Healey mounts tax raid on wind farms

Britain’s wind farm owners face a tax raid from John Healey to stop them profiting from surging gas costs. Over the next decade, more than 3,000 renewable projects face a windfall tax of at least 55pc on the profits from power sales. The plans, announced by the Chancellor, are designed to force them onto fixed tariffs for the power they generate and to stop them profiting from surging gas prices. Thousands of wind farms signed up to an old subsidy scheme, known as the Renewables Obligation Certificate (ROC), which lets them sell their power at prices set by gas-fired power stations.

This scheme was halted to new entrants in 2017, but those registered before then can claim subsidies up until 2037. The legacy scheme is set to cost bill-payers £8bn in subsidies this year – plus the cost of the actual power. The Department for Energy Security and Net Zero has published detailed plans about the tax, known as the electricity generators levy. It is hoped the windfall tax will encourage windfarm operators to move to Contracts for Difference, which would guarantee generators a minimum “strike” price but also be a cap on what they could charge.

A similar scheme has already been agreed with EDF for the output from Sizewell B nuclear power plant, also stabilising the cost of the power it generates. Lucrative ROC subsidies added £100 a year to the average bill last year, the most expensive of all green subsidies , prompting a backlash that forced Labour to shift 75pc of costs to the Treasury, meaning they come from taxes instead. Energy industry experts have challenged government claims that consumers would benefit from the proposed scheme, pointing out that although the scheme would stabilise power prices, it would leave the subsidy regime in place.

John Constable, of the Renewable Energy Foundation, said: “The Government expects wholesale prices to fall, so under the new scheme consumers will mostly be paying top-ups to generators. That is a net cost, not a saving, and government must know it.” Scottish local authorities are also challenging the plans. Bob Hope, the chairman of the South of Scotland Convention of Community Councils, said: “Tweaks to windfarm contracts will not help struggling families with predicted energy price rises of over £450 per household, early in the new year.”

A spokesman for wind industry trade body RenewableUK gave the plan a cautious welcome, but said the fixed prices offered had to be a “fair deal” to make up for any lost income. “Gas now sets the power price far less often than it did at the start of the decade, because more of our electricity comes from clean, home-grown sources. Renewable power has saved bill payers over £6bn this year in avoided gas import costs.” A government spokesman said: “We want to break the grip of volatile global fossil fuel markets on Britain’s energy bills by moving older wind and solar farms onto fixed-price contracts, so that when gas prices soar, the extra money goes back to bill payers rather than becoming a windfall for generators.”