Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the impact of the Electricity Generator Levy on investment in (a) onshore and offshore wind infrastructure and (b) other sources of renewable energy.

As announced at Autumn Statement from January 2023 a 45% tax is being levied on the extraordinary returns being realised by certain electricity generators. This is forecast to raise around £14 billion over the next 5 years to help fund support for households and business with their energy bills as well as vital public services.

The levy will only be applied to extraordinary returns defined as returns from selling electricity for a period at an average price of more than £75/MWh. This is approximately 1.5 times the average price of electricity over the last decade. The Government considers this to be a proportionate approach to recovering a share of the extraordinary returns electricity generators are receiving while leaving generators a share of the revenue from high electricity prices. The Office for Budget Responsibility considered the impact of the levy on its economic and fiscal forecasts which was published at Autumn Statement in its economic and fiscal outlook. Further information on the impact of the policy is set out in a Tax Information Impact Note which is available on www.gov.uk

The Government continues to provide considerable support for investment in renewables Since 2014 the Contracts for Difference scheme has enabled around 26GW of new low-carbon capacity, with generators receiving almost £6 billion net in price support. The UK has reduced emissions faster than any other G7 nation, with 41% of our electricity coming from renewables last year, compared to 22% in the USA.