Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of the Electricity Generator Levy on the financial viability of (a) solar projects already in operation and (b) solar projects under planning consideration; and what assessment he has made of the impact this will have on reaching the solar ambitions set out in the British Energy Security Strategy.

From January 2023, a 45 per cent tax will be levied on extraordinary returns being realised from non-carbon electricity generators, including solar generators, in the UK. The measure will raise around £14.2 billion over the scorecard and help fund support for households and businesses with their energy bills as well as vital public services.

The levy will only be applied to a measure of 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 proportion of the extraordinary profits electricity generators are receiving whilst leaving them with a sufficient level of return to incentivise investment required to transition to net zero.

The levy will be limited, through a de minimis threshold, to those groups generating more than 100 Gigawatt-hours per annum of electricity from in scope generation assets in a qualifying period and will only be applied on extraordinary profits in excess of £10m for the group. This means smaller generators will not be within scope of the levy.