Scotland economy: Windpower firm boss warns new tax will hit jobs

“A pound won’t come across the Borders from this revenue,” he said.

The company, which has eight wind farms in operation in Scotland and another six in development, believes the EGL, announced in the Autumn Statement by Chancellor Jeremy Hunt, discriminates against renewables in favour of carbon emitting industries.

Renewable companies also believe it can be challenged in the courts because it will have an adverse impact on attracting investment and reducing carbon emissions. 

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The Treasury claims the new levy of 45 per cent on receipts above a benchmark price of £75 per MWh (megawatt-hour) will raise £14.2 billion of public revenue by 2028.

However, while the a similar windfall tax on oil and gas firms allowed them to claim back £91.40 of every £100 of profit by investing 
it, there is no similar allowance for renewables.

Mr Wood is hopeful the Chancellor can be persuaded to change his mind before the Budget on March 15, when the legislation for the EGL will likely be tabled.

“We understand we all need to help, we need to share the burden. But we are sort of whipping boy of the energy industry,” said Mr Wood. “We were targeted by [former business secretary] Jacob Rees-Mogg. This seem to be a legacy of the Truss, Rees-Mogg strategy, to hit solar and onshore wind.
“Gas, diesel and particularly coal have been left out – they are all being encouraged and supported and, in fact, they are being protected.”

Jeremy Hunt’s windfall tax on renewables has been branded a “direct tax on Scottish businesses

Mr Wood pointed to the decision to keep the Ratcliffe-on-Soar power station in Nottinghamshire open until 2024 after ministers intervened to plead with owner Uniper to keep the coal-burning facility open.

Mr Wood added: “Coal’s got an extra two years now. Some of these plants are being incentivised to keep going in the face of all the climate change and environmental policies that are out there.”

“We don’t understand why. It’s a very selective approach. Maybe it’s more difficult but there are other ways of skinning a cat. You could just increase the corporation tax rate.”

The energy boss said the big issue was the benchmark price of £75. 
He said it had been “plucked out of thin air”.

“It’s not a fair level. It’s actually going to potentially be the new cost. So let’s assume it’s the new cost for new investment going forward with interest rates as high as they are and [capital expenditures] up 50%, inflation up, then that means our corporation tax rate is 70%. That’s how we see it. It’s as simple as that.

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“The bulk of offshore wind is going to be in Scotland. This is obviously  a direct tax on Scottish businesses.

“No business can afford to pay 70% tax. It is going to stop this investment and people will choose to invest elsewhere.

“There’s huge incentives in the US to invest, big incentives in Ireland, Germany, and Europe.

“And the hurdle rate there is not £75, it’s £115, and £120, which is 
a fairer level.”

He said this was happening as both the Scottish and UK governments were making a big push for renewables and net zero.

“The big pension funds, big US, European banks won’t invest here. What [the EGL] is saying is ‘go elsewhere’.”

Mr Wood said this would mean Scotland and the Treasury losing out on revenue and jobs. He said onshore wind would create 24,000 vacancies but would feed into green hydrogen batteries, and other new technology and create a new job base.

“We’re a small outfit with 300-megawatts of operational wind, we’re on a roughly £5 million a year in rates, bigger firms would pay substantially more,” he said.

“They’re looking at this £14bn in windfall tax. What they are ignoring is that if it doesn’t get built, there won’t be the windfall tax. More importantly, [there] won’t be any corporation tax on that investment, and the job creation.”

He said the industry was facing rising costs, while having its income capped and reduced.

“These are big investments. And they’re all project finance. UK banks, German banks, US banks, and they’ll have deals offered elsewhere in Europe and they go ‘well, actually, there’s a safer bet’.

“So, Scotland will miss out. We won’t hit the targets”.

“We’re not disagreeing with the principle of it, but we think if we are having to contribute, then it’s only fair that everyone does. 

“The oil and gas and the carbon polluters should be paying more. They are polluting the environment.”