Posted on: 21/11/2022
Head of Smart Generation Sales, Angus Widdowson shares a summary of the Electricity Generator Levy, published in the Autumn Statement 2022 on the 17th November.
In last week’s Autumn Statement, the UK Government introduced the Electricity Generator Levy to recoup funds from renewable generators who are currently benefitting from the returns of extraordinary high wholesale prices.
In the Government’s Electricity Generator Levy Technical Note, they set out the following:
- A temporary 45% tax will be introduced for electricity sold above £75/MWh.
- The levy will only apply to wind, solar PV, nuclear and biomass technologies, excluding generators with Contract for Difference (CFD)
- It will not apply to generators with under 100GWh generation per annum
- There will also be a £10m allowance before the tax applies
- Revenues exclude ROCs and Capacity Market, but does include net imbalance settlement and gains/losses on hedges
- There is no reinvestment allowance as there is with the oil and gas equivalent levy
- It is initially planned to be in place from January 2023 until March 2028.
The Levy will replace the ‘Cost Plus Revenue Limit’ that was announced in October and will be legislated for in the next Finance Bill. The Government have set out this new levy to ensure generators contribute a proportionate amount to schemes such as the Energy Bill Relief Scheme (EBRS) through the corporate tax system. The Electricity Generator Levy is expected to raise of £14 billion between 2023-2028 to help pay for the £55 billion of Government support for households and business energy bills.
> Read the Governments Autumn Statement 2022 Energy Taxes Factsheet