Hundreds of millions of pounds of renewables investments in Britain could be at risk as a result of the controversial electricity generator levy (EGL).
The Association for Renewable Energy and Clean Technology (REA) has warned that the massive cash grab on green energy producers will impact the UK's energy security, hit bill payers, and act as a drag on the net-zero push.
The 45% windfall tax was announced in the recent Budget.
The levy aims to raise £14billion by 2028 from renewable, nuclear and biomass firms.
REA says the tax move must be "appropriately designed to avoid serious market disruption".
It claims that the EGL is already having severe effects on the sector.
Evidence
REA says there is evidence that hundreds of millions of pounds of low-carbon investment has stalled since the tax change was unveiled in November.
It brings the headline rate on earnings for green energy companies to 70% when combined with Corporation Tax.
Newer green-energy projects backed by Contracts for Difference (CfD) aren't impacted, leading to claims the government is penalising renewables pioneers.
The CfD scheme is the UK Government's main method for supporting low-carbon electricity generation.
And, unlike the windfall tax on North Sea oil and gas producers, the EGL doesn't have an investment-allowance mechanism built in - something the REA says must be addressed.
It is pushing Westminster to provide spending relief to the renewables and clean technology sector, arguing that failing to do so will undermine much-needed investment.
Question the wisdom
Frank Gordon, director of policy at REA, told Energy Voice: "While the REA and its members recognise the immense economic challenges facing this country, we would question the wisdom of subjecting the cheaper, greener renewable-power sector to a more punishing tax system than its oil and gas counterparts.
"We strongly urge the Government to fix this disparity by providing a tax relief for low-carbon investments as part of the EGL design.
"This is crucial for getting investments in renewables moving again following the pause that resulted from the last few months of political and policy uncertainty."
One industry figure warned earlier this month that the EGL will deter investment in the wind and solar farms the country needs to hit climate goals.
Bernard Fairman, the founder and biggest shareholder of Foresight Group., said that it was now more attractive to invest in building renewables in Australia and Europe than in Britain.
One of the UK's biggest energy groups has already warned that it will have to review its investments in renewables because of the government's new levy on electricity generators.
'Give up' on some plans
The boss of Perth-based SSE said it "may have to give up" on some green-energy plans.
Alistair Phillips-Davies, the chief executive, stated that the company believed in "paying their fair share" in taxes.
But he added: "We still want to spend, we still want to invest but this windfall tax is going to hit us. It's going to take money away from us, and therefore we won't have as much to invest."