Skip to main content

Wind farms are asking for a tax brake.

 Sev­eral big wind farm developers, includ­ing Sweden’s Vat­ten­fall and Den­mark’s Orsted, are seek­ing

Wind farm
tax breaks from the UK gov­ern­ment or enhanced sub­sidies as a sharp rise in costs puts Brit­ish projects at risk. Sev­eral com­pan­ies that won con­tracts in a gov­ern­ment auc­tion last year to build new renew­able power gen­er­at­ing capa­city from 2024 have warned min­is­ters the projects will be dif­fi­cult to deliver at the prices agreed, accord­ing to people involved in the talks. Last year’s sub­sidy auc­tion was the UK’s most extensive to date and secured enough capa­city to provide 12mn homes with cheap, low-car­bon power. The UK has 13.7GW of off­shore wind capa­city oper­a­tional but is seek­ing to increase that to 50GW by 2030 as part of an energy secur­ity strategy drawn up by min­is­ters last year, shortly after the full­s­cale inva­sion of Ukraine.

But some wind farm developers that secured con­tracts in last year’s auc­tion have either delayed or are hes­it­at­ing to take final invest­ment decisions on those projects. This reflects how cost rises of 20-30 per cent over the past 12 months made it more dif­fi­cult to jus­tify that spend­ing without extra gov­ern­ment incent­ives, said the people involved in the dis­cus­sions between the industry and min­is­ters. Developers of renew­able energy projects are tra­di­tion­ally incentiv­ised to invest in new schemes through annual auc­tions involving state sub­sidy agree­ments, known as «con­tracts for dif­fer­ence». These con­tracts help developers secure fin­an­cing for projects by guar­an­tee­ing a price for their power out­put.

The Swedish state-owned com­pany secured an agree­ment in last year’s sub­sidy auc­tion known as AR4 for the first phase of its Nor­folk project, the 1.4GW Boreas off­shore wind farm. Off­shore wind farm developers that were suc­cess­ful in the auc­tion were guar­an­teed prices of £47 per mega­watt hour in today’s money once their projects are oper­at­ing. In addition, US pres­id­ent Joe Biden’s recent Infla­tion Reduc­tion Act includes $369bn worth of tax cred­its, grants and loans to boost renew­able energy and slash emis­sions. The largest project pro­cured in last year’s auc­tion was Orsted’s 2.85GW Hornsea 3 wind farm off the coast of Nor­folk.

These included delay­ing the start date of their con­tracts so the ini­tial power out­put from projects could be sold at higher mar­ket prices than the lower guar­an­teed levels in con­tracts. Developers of renew­able energy projects are also con­cerned that pri­cing levels for the next auc­tion this sum­mer will be set too low by the gov­ern­ment. Simon Vir­ley, UK head of energy and nat­ural resources at KPMG, said the gov­ern­ment had «to find a way for­ward that enables these projects, and their asso­ci­ated sup­ply chain invest­ments, to go ahead» given the «excep­tional cost and sup­ply chain pres­sures» facing wind farm developers. The gov­ern­ment said that the con­tracts for renew­ables com­pan­ies «already provide pro­tec­tion to energy gen­er­at­ors», given they were linked to infla­tion.

www.sba.tax


Labels:

Comments

  1. Miles27 February 2023 at 09:35

    Prices have indeed gone up considerably so their requests are reasonable. The government must act NOW and make sure these companies get all the help they need to produce the energy the UK needs. This must be a priority.

    ReplyDelete
  2. Kyle M.27 February 2023 at 10:01

    The government must offer incentives that take care of that extra 20-30% cost rises. Otherwise we won't get the energy needed. It's that simple.

    ReplyDelete
  3. Q27 February 2023 at 10:38

    50GW by 2030 seems so far away now and if they don't do something very soon this will be just a dream. 13.7GW is not enough right now. We should get to 20GW within the year or so.

    ReplyDelete

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

India- UK trade deal.

  According to India's top trade official, talks with the UK regarding a trade agreement are progressing well, despite obstacles related to temporary work visas and the opening up industries like automotive and spirits. The Commerce and Industry Minister, Piyush Goyal, explained that India is seeking transition periods or greater market access in specific sectors due to its economy, which is slightly larger than the UK's and expected to outgrow it in the coming decades. If a trade deal is reached, it would be one of the most significant agreements for Britain since leaving the EU, and it would also be necessary for India, which surpassed the UK as the fifth-largest economy last year. Goyal stated that India aims to increase its economy from $3.5tn to $35tn by 2047, the country's centenary of independence. According to officials and diplomats in India, talks about a proposed trade deal may be finished by early September, just in time for the G20 summit in New Delhi. Nigel Hu...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more