SSE has hit out at UK chancellor Rishi Sunak’s plan to impose a windfall tax on electrical energy turbines, warning that the “unhelpful” risk has harmed investor confidence simply as corporations deliberate to plough billions of kilos into new power tasks in Britain.
“They [the government] used the word extraordinary profits [to justify the proposal]. Where are these extraordinary profits?” SSE chief government Alistair Phillips-Davies informed the Financial Times.
“I’m not entirely sure where the windfall is. Given that we have got very well-developed plans to invest lots in [energy] networks, lots in renewable generation, it’s very clear from the share price reaction that they are affecting investor confidence and that is unhelpful for us,” he added.
Sunak confirmed that he additionally deliberate to focus on electrical energy turbines when he introduced a brand new 25 per cent windfall levy on oil and fuel producers on the finish of May to partially fund a £15bn package deal to assist households with hovering power payments.
Describing electrical energy turbines’ earnings as “extraordinary” because of excessive wholesale energy costs, the chancellor stated he was contemplating “appropriate steps” to make sure turbines additionally contributed in the direction of assist for customers.
The plans have wiped billions of kilos off the worth of energy corporations together with SSE, Drax and Centrica and has even drawn criticism from the Labour celebration, regardless of its MPs championing a windfall tax on oil and fuel producers.
On a go to to Peterhead, north of Aberdeen, the place SSE is spending greater than £250mn to bolster the electrical energy grid so as to accommodate extra renewables tasks, Phillips-Davies argued the era sector was “much more complex” than oil and fuel.
Power corporations are likely to promote their output far upfront and the sector covers a spread of various applied sciences which might be topic to totally different subsidy regimes.
“Looking at one price on one particular day for one megawatt [hour of electricity] or one therm of gas, not everything trades at that price,” stated Phillips-Davies.
SSE’s adjusted working revenue rose 15 per cent to £1.5 billion within the yr to March 31, boosted by its gas-fired energy stations and hydro crops that assist to fulfill provide when renewable applied sciences, resembling wind, aren’t producing. Profit at SSE Thermal, which incorporates its fuel crops, jumped 91 per cent final yr to £306.3mn
But Phillips-Davies argued some belongings that benefited from report fuel and energy costs final yr beforehand made losses. He cited SSE’s fuel storage services, which generated £30.7mn in revenue final yr however didn’t make any cash for the earlier decade.
Before Sunak’s speech final month, SSE pledged to take a position greater than £24 billion this decade in clear power infrastructure in Britain. It is growing huge new wind farms resembling Dogger Bank off England’s north-east coast, which would be the world’s greatest offshore array when it’s completed in 2026.
In Peterhead, the place SSE has an current gas-fired energy plant, the group hopes to develop a brand new facility fitted with carbon seize expertise to assist meet demand in future, when Britain’s system can be much more reliant on intermittent renewables however must emit little CO₂.
Asked if a few of these tasks could possibly be threatened by a windfall tax, Phillips-Davies stated SSE would nonetheless be capable to construct the tasks in its £24bn pipeline however warned ministers: “If somebody decides to change tax laws we will have to restructure our projects so they still make money.”