One of the UK's biggest energy groups has warned that it will have to review its investments in renewables because of the government's new 45% windfall tax on electricity generators.

The boss of Perth-based SSE said at the weekend it "may have to give up" on some green energy plans when the electricity generator levy (EGL) comes into effect.

The new tax, unveiled in Thursday's Budget, hopes to raise £14billion by 2028 from renewable, nuclear and biomass firms.

Alistair Phillips-Davies, the chief executive of SSE, said the company believes in "paying their fair share" in taxes.

But he told the BBC: "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."

Review of investments

Asked whether the company will have to review some of its key investments, the CEO said "there is no doubt".

"To say that imposing a 45% windfall tax on some areas of our business will not impact investment plans is nonsense," he added.

Mr Phillips-Davies said on publication of his company's half-year results last Wednesday that the company's net-zero acceleration programme had never been more relevant to society.

He commented then: "We are investing around £12.5billion in the five years to March 2026, with further opportunities that could take the total to over £25billion this decade in the UK and Ireland alone.

"This direct investment primarily in offshore wind, UK electricity networks and flexible thermal will create the technologies to support long-term energy security."

An offshore wind expert has labelled the EGL on electricity generators a penalty on early entrants into the renewables market.

Unattractive investment environment

John MacAskill, global managing director of renewables at consultancy firm ABL Group, has accused the UK Government of creating an unattractive investment environment for low-carbon investors.

There was an angry response to the announcement of the EGL from bodies representing renewable firms in Britain.

RenewableUK warned that the tax could severely deter investment in much-needed new renewable energy projects.

It pointed out that renewable generators will not be granted any equivalent investment allowances that are available to investors in oil and gas extraction.

The body also highlighted that the EGL will not be applied to gas or coal power plants.

Scottish Renewables' chief executive Claire Mack said the UK needs £1.4trillion to fund its transition to net-zero by 2050.

Incentivising investment

She added: "To raise that money, international investors look to the UK Government to provide a stable policy environment which incentivises investment in clean power.

"The chancellor's announcement damages this country's reputation as a leader in renewable energy - chiefly by continuing to offer investment allowances to oil and gas extraction while failing to do the same for this industry."

North Sea oil and gas producers were also targeted in Thursday's Budget.

The Chancellor Jeremy Hunt hiked the energy profits levy (EPL) on North Sea oil and gas producers by another 10% to 35% - bringing the overall tax rate from January to an eye-watering 75%.

He has also extended the lifespan of the EPL until March 2028 from the previous date at the end of 2025.

The EPL is now expected to raise a total of £40billion - double the previous figure of £20billion. The total tax take from operators in British waters in the next six years will hit a staggering £80billion.

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