Britain’s energy industry risks “death by a thousand cuts” as tax raids, red tape and a constant "flip-flopping" on policy deter investment, the head of one of the country's biggest power producers has warned.
Tom Glover, the UK boss of RWE, said Jeremy Hunt's windfall tax and the lack of a clear growth strategy had put the company's investment plans in this country at risk.
He told the Telegraph that £12billion of RWE's original £15billion investment plans by 2030 was now "up for grabs".
It comes after the chancellor’s decision to extend a windfall tax to electricity generators in the Autumn Statement, which Mr Glover said is "overhanging the market".
RWE is the second-biggest power generator in Britain and provides around 15% of all the country’s electricity needs. It has set out major plans for investment in UK offshore wind.
However, Mr Glover said the constant threat of policy and tax interventions had stymied investment and threatened to push up energy bills. Other markets such as the US and Asia are now "looking more attractive", he added.
Threat to investment
RWE is the latest energy company to warn about the threat to investment in the UK as a result of policy uncertainty and greater competition from abroad.
Five energy trade associations wrote to the chancellor this month to express concern that there is "no clear government plan to deliver green economic growth".
Only £3billion of RWE's £15billion British investment plans have reached a final investment decision, where contracts are signed and big orders made.
"The remaining £12billion is up for grabs, if you like," said Mr Glover.
"So when we say it's allocated in our business plans, it can be reallocated at any point in time. And every financial investment has to make sense when we make it."
The chancellor has increased the energy profits levy on oil and gas producers and also introduced a similar tax on low-carbon electricity generators.
Assurances
While Mr Glover said he had received assurances from the chancellor that the tax would end as planned in 2028, he noted that Mr Hunt could not "bind future chancellors or future governments".
"There's always a risk that, once you've introduced it, in future they either extend it or make it worse, so it overhangs the market - and, once governments get that tax revenue in, it's not clear to us that they won’t like it a lot and just continue it," he said.
Uncertainty over tax and energy policy risked pushing up household bills, he warned.
"If investments are more uncertain and more risky... either the investment doesn't happen, or investors charge more," said Mr Glover. "If we are stuck with the risk of tax, risk of policy intervention, then clearly when I go for my investment decision, my owners RWE will require a higher return. And if they require a return, ultimately the customer pays.”
- Westminster's intervention in the electricity market risks mothballing a series of multi-billion pound green energy projects, a major investor has warned.
Energy Voice reports that Community Windpower claims the "US and EU are doing all they can" to attract renewables spend, while the UK is "doing all it can to deter it" by imposing the electricity generator levy.
As a result of the policy, Britain is said to be on the back foot in the global "renewable energy 'arms race'".