Wind farm developer threatens to sue UK government over plans for ‘windfall tax’

A Cheshire wind farm developer has threatened to sue the UK government over its plans to impose a ‘windfall tax’ on renewables companies.

Community Windpower – which owns 1.5 GW of UK wind generation capacity – has said it will take legal action to block the UK’s Electricity Generator Levy.

The temporary tax imposes a 45 per cent levy on “exceptional receipts” of more than £10m generated by selling wholseale electricity at average prices exceeding £75 per MWh.

Community Windpower has instructed London law firm Mishcon de Reya in its bid to block the new levy by way of judicial review.

Mishcon de Reya has written to the UK government, warning them they will take legal action if they push forwards with the levy, on the basis that the new tax contravenes the government’s own Net Zero strategy.

Mishcon partner Alexander Rhodes said: “The way this levy has been designed is completely at odds with the Government’s own stated objectives to transition the UK to a net zero economy and develop a secure supply of clean energy.”

“This levy cuts across those ambitions, contrary to the Government’s own legislated goals and legal responsibilities,” Rhodes said.

The new levy on electricity producers is set to come into force on 1^st January 2023, after first being announced in the Autumn statement, and remain in place until 31^st March 2028.

The UK government’s announcement of the Electricity Generator Levy comes after it vowed to impose a 35 per cent windfall tax on profits from the oil and gas sector from 1 January 2023 to 31 March 2028.

Community Windpower’s managing director Rod Wood called the new levy “a smash and grab raid on renewables that will pull the rug out from under the UK’s efforts to cut carbon, cut consumer bills and bring on energy security.”

““This measure not only leaves Ministers’ green credentials in shreds, it will also suck hundreds of millions of pounds out of investment in green energy, hammering renewable industries and costing high quality jobs,” Wood said.

“Legal action is a last resort, but the levy proposals quietly slipped out ahead of Christmas are worse than we feared,” Wood added.

“Despite forceful representations made directly to Government over the past two months, Ministers have remained immune to reason.”