Autumn Statement 2022: tax on electricity generators

As expected, the government has announced the ‘Electricity generator levy’ (a windfall tax in other words). The good news is that it is focussed on larger generators and even then only those generating electricity from wind, solar and nuclear.

Whilst there is a lot of detail there are 2 key parts that mean the majority of our clients (typically <20MW generation capacity) will not be affected:

Section 1.22 states:

The levy will be limited, through a de minimis threshold, to those groups generating more than 100 Gigawatt-hours (GWh) per annum of electricity from in scope generation assets in a qualifying period.

100GWh = 100,000MWh = 100,000,000kWh

A high performing PV system would need to be rated at >75MW peak output to achieve this.

A bimomass generator runing 24/7 would need to be rated at >11.4MW to achieve this.

If you generate electricity from gas e.g. a natural gas fulled CHP, even if you exceed the above you are not affected at all. Section 1.47 states:

The government does not therefore think it appropriate to include gas generators within scope of the levy and thinks that the inclusion of gas generators could have unintended impacts on pricing with implications across the entire market or on the dispatch decisions of certain business models. This approach is consistent with gas generation being excluded from similar tax and regulatory interventions overseas.

The full detail can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1118358/Electricity_generator_levy__technical_note__final.pdf