Windfall taxes are pushing up the cost of green energy projects by as much as 50pc, industry leaders have warned, as international investors take fright amid a raid on profits.
Energy UK, the industry trade body, said that a windfall tax on renewable energy generators and regulatory flip-flopping is significantly increasing costs and damaging Britain’s reputation among private investors.
The association warned in a report that the investment climate for UK low-carbon generation has “deteriorated significantly” in recent months, owing to soaring inflation, rising interest rates, supply chain difficulties and increased competition from abroad.
It added: “A poorly designed windfall tax has caused immediate concerns for the viability of new clean energy projects, particularly renewables.
“The knock-on effect for new low carbon generation is that overall costs have increased by a staggering 20-30pc, with some developers reporting cost increases of up to 50pc for specific projects.”
The lesson to take from this? Investors look at the post-tax return when deciding whether to invest. Therefore taxes on returns to investment reduce investment.
Should be obvious but sadly it ain’t. There are all too many who try to insist that taxes on investment income don;t change the amount invested.