Scottish energy group SSE has stressed that it is vital that the UK Government's proposed "windfall tax" on renewable energy generators does not negatively impact on security of supply this winter.
Tory politicians say the move could save billions of pounds for energy consumers, but the companies being targeted warn it risks skewing investment towards fossil fuels.
The Energy Prices Bill includes a temporary "cost-plus-revenue limit" which will reduce the profits the generators can make by severing the link between high global gas prices and the cost of their low-carbon electricity.
SSE responded yesterday to the new legislation by saying any revenue cap must be set at a level that doesn't discourage essential investment in the UK's renewable energy sector.
The spokesperson added: "The key lesson of the current energy crisis is the need to bolster our home-grown energy defences.
"It is also vital that the cap does not negatively impact on security of supply this winter - therefore flexible technologies, such as hydro, that require strong price signals to meet demand when most needed, should be excluded.
Meets objective
"We will now work with the government on the details of the policy to ensure it meets its objective of addressing extraordinary profits without throwing away the UK's global leadership position on renewable energy investment."
Claire Mack, chief executive of the Scottish Renewables trade body, said yesterday that the cost-plus-revenue limit proposal requires careful consideration to ensure it will incentivise the energy system the UK needs - one which uses the cheapest forms of clean power supplied at a stable price.
She added: "The cap which is suggested as part of the Energy Prices Bill will act as a 100% windfall tax on renewable generators above a certain as-yet unspecified level.”
Ms Mack said that the UK Government must ensure that the country is not locked in an enduring dependency on the fossil fuels which were the root of the current problems.
She went on: "Enacting a revenue cap on low-carbon generators ignores the fact that, in the long-term, the best way to cut household energy bills is by increasing energy efficiency and building more of the cheap renewable electricity capacity which our industry can provide.”
Ms Mack said policy decisions made by the UK Government in recent years had already damaged the country's attractiveness to the international investors needed to fund the country's £1.4trillion transition to net-zero.
Liaising with Scottish Government
As things currently stand, the "cost-plus-revenue limit" would only apply to England and Wales. But the UK Government says it is liaising with the Scottish Government to confirm whether the measure will extend to Scotland.
The full scope of the limit is still being determined, but it will apply to low-carbon generating assets not currently covered by a contract for difference which agrees a price for energy with the government.
Older wind and solar energy projects will be affected, and there's also a risk to nuclear and biomass generation.
The precise mechanics of the limit are to be subject to a consultation to be launched shortly.
The UK Government said it had been working closely with industry on the detail of the proposal, ahead of it coming into force from the start of 2023.