British Government Targets Renewable Energy Profits to Bring Down Soaring Bills

An aerial photograph shows the Sycamore Farm Solar Farm, in Old Romeny, southeast England, on April 18, 2022. Ben Stansall /AFP via Getty Images

Legislation from the government could see excess revenues made by some renewable energy generators capped to reduce the impact of unprecedented wholesale price increases being charged to consumers.

The government announced that its proposed Energy Prices Bill that was introduced in parliament on Oct. 12 will have a “cost-plus-revenue limit” on electricity generated from wind and solar farms and nuclear energy in England and Wales. The precise mechanics of it will be subject to a consultation to be launched shortly.

The government said that many of Britain’s wind farms and solar farms were paid much more than normal for their products and were benefitting even though their costs had not increased very much.

“Low-carbon electricity generators are therefore benefiting from abnormally high prices, while consumers are having to pay significantly more for energy generated from renewables and nuclear, even though they often cost less to produce,” wrote the government.

Britain's Business, Energy, and Industrial Strategy Secretary Jacob Rees-Mogg attends the third day of the annual Conservative Party Conference in Birmingham, central England, on Oct. 4, 2022. Oli Scarff/AFP via Getty Images

Abnormally High Prices

The Bill, introduced in Parliament on Wednesday, provides the “legislative footing needed to ensure that people and businesses across the UK receive support with their energy bills this winter.”

Business and Energy Secretary Jacob Rees-Mogg said: “We have been working with low-carbon generators to find a solution that will ensure consumers are not paying significantly more for electricity generated from renewables and nuclear.”

“That is why we have stepped in today with exceptional powers that will not only ensure vital support reaches households and businesses this winter but will transform the United Kingdom into a nation that offers secure, affordable, and fairly-priced home-grown energy for all,” he added.

The government said that in the UK market, wholesale electricity prices are set by the most expensive form of generation, presently gas-fired generation. It added that the price was “significantly higher in light of Russia’s appalling invasion of Ukraine and Putin’s subsequent weaponisation of gas supplies.”

Green Policies

In March, Dr. John Constable, director of energy at Net Zero Watch, told The Epoch Times a push to renewable energy and a commitment to Net Zero policies has also made Europe and UK critically dependent on gas in their electricity systems, which has increased the fragility of the underlying conventional systems that are keeping everything going.

In a recent article on the subject, Constable said that “the Cost-Plus Revenue bill is unambitious window-dressing that defers the day of reckoning once more.”

“It takes baby steps in the right direction but shies away from confronting the realities. The current catastrophe is the result of twenty years of misguided renewables policies, and only a root branch reform of those green policies stands any chance of giving real and longer-term relief to UK consumers,” he added.

Wind turbines dominate the skyline at the Braes of Doune windfarm in Stirling, Scotland. Jeff J Mitchell/Getty Images

The government said that “this intervention differs from a windfall tax as it will be applied to excess revenues generators are receiving, as opposed to applying to all profits.”

Though industry figures disagreed.

Dan McGrail, chief executive of the renewable energy trade association RenewableUK, warned that the move risks “skewing investment towards the fossil fuels that have caused this energy crisis.”

“We are concerned that a [revenue] price cap will send the wrong signal to investors in renewable energy in the UK,” he said.

Keith Anderson, chief executive of Scottish Power, which has 40 operational windfarm sites, said he was disappointed by “such a significant market intervention.”

“It’s disappointing that such a significant market intervention by the Government has come with so little detail, all this does is create uncertainty,” added Anderson.

“This crisis has been caused by the cost of gas and it’s strange the proposed solution is to cap the price of low carbon generation and to leave the gas sector untouched,” he added.

PA contributed to this report.