UK plans to cap renewable energy revenues

‘Now is the wrong time to be stringent on an industry that needs the investment’



ESG Clarity

The UK government has been criticised for “going too far” amid plans to cap renewable energy company revenues.

Proposals emerged on Wednesday morning (12 October) that ministers are set to cap revenues of energy companies, which have been driven higher by record wholesale power prices. This, ministers said, would ensure consumers and businesses pay a fair price for energy.

Under the Energy Prices Bill, the House of Commons has suggested limiting the amount generators can make and encompasses wind and solar farms as well as nuclear power plants.

See also: – Investor groups pile pressure on new UK PM to deliver net zero

“While no details have yet been provided for a cap on the revenues of renewable energy providers, the wind is clearly blowing in that direction given the soundings coming out of the government, said  Tom Gilbey, equity research analyst at Quilter Cheviot. “It is right that there should be a cap in place and that companies cannot expect to make supernormal profits at a time when household energy bills are soaring.

“However, there is a balance to be struck here and a risk that the government goes too far with its plans. Overall, this wouldn’t be a particularly positive or progressive move at a time when investment should be encouraged into renewables and green energy technologies. This could result in a step backwards in our transition towards a greener future and impact jobs in what is still a developing industry.

The government said it would launch a consultation on how the revenue cap would work before introducing the measure at the start of 2023, according to the BBC.

“The UK government has spoken about the importance of this industry, but the caps are rumoured to be below the levels set by the EU and thus does risk putting off people bidding for projects in the UK,” Gilbey added. “With the energy transition in full flow, now is the wrong time to be stringent on an industry that needs the investment.”

Latest Stories