Drax and Infinis shares plunge as Chancellor is accused of “punitive”
attack on renewables companies
By Emily Gosden, Energy Editor
Shares in renewable energy companies plunged on Wednesday after the
Chancellor unexpectedly slashed their incomes by ending an effective
subsidy scheme.
Industry groups accused George Osborne of making a “punitive” and
“retrospective” change after he announced that renewable power generators
would no longer be exempt from the Climate Change Levy.
The exemption currently results in an effective subsidy payment to
renewables firms of more than £5 for every unit of green electricity they
generate.
Shares in Drax, which burns biomass, fell by more than a quarter after
analysts estimated the change could almost halve its earnings by 2016-17.
Wind industry body Renewable UK said the move would cut onshore wind farm
generators’ revenues by just over 6pc. Shares in Infinis Energy, the wind
farm developer, fell 8pc.
Announcing the change, Mr Osborne said the exemption was “out-dated” and
had “seen taxpayer money benefitting electricity generation abroad”. The
Treasury estimates that ending it will bring in £450m this year, rising to
£910m by 2020-21.
John Musk, analyst at RBC Capital Markets, highlighted Ofgem data showing
that more than 70pc of the income from the exemption currently went to UK
renewable generators.
“We believe the Chancellor has therefore chosen to use a ‘sledgehammer to
crack a nut’,” he said.
Dorothy Thompson, Drax chief executive, said: “We are surprised and
disappointed at this retrospective change to a support regime which has
been in place since 2001 specifically to encourage green energy and support
renewable investment decisions.”
Gordon Edge of RenewableUK said the move was “a punitive measure for the
clean energy sector” and said cash received as a result of the exemption
had “provided vital financial support for renewable energy producers”.
“We’re suddenly looking at a substantial amount of lost income for clean
energy companies which was totally unexpected,” he said.
John Constable, director of the Renewable Energy Foundation, a group
critical of green subsidies, said the change was “in effect the first
retrospective cut to renewables subsidies yet seen in the UK”.
4 Comments
may hurry · July 9, 2015 at 8:17 pm
no such animal as ‘renewable’ energy, for proof study Carnot Cycle, its about time government cracked down on this Ponzi scheme, could fairly be called a ;TURBINE TAX’!!