UK Chancellor Jeremy Hunt’s windfall tax on power generators will deter investment in the wind and solar farms the country needs to hit climate goals, an industry figure says today.
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 after the imposition of the electricity generator levy.
He told the Times: "If you tax renewables, there'll be less of them. It's really somewhat obvious.
"For the government to suggest on the one hand that we're going to become a green powerhouse, whilst on the other hand putting in place a windfall tax with a whole load of issues, strikes me as slightly strange. Do you or do you not want to encourage more renewables? Because what has happened will discourage them."
Foresight is a sustainability-focused investment manager with about 1.5 gigawatts of onshore wind and solar in Britain, and a pipeline of around one gigawatt that could be developed.
The 45% windfall tax on electricity generators was announced in the recent Budget.
Levy targeted to take in £14billion
The levy aims to raise £14billion by 2028 from renewable, nuclear and biomass firms.
Mr Fairman said that to achieve the government's green targets there needed to be a massive increase in investment.
"I'm not sure in which universe you encourage a massive increase by putting the tax up," he said. "If we've got a shortage of something, you don't tax it and make it more difficult to produce, do you? That's just economics for 10-year-olds."
Foresight said last week that the levy had knocked the value of its assets under management by £100million. It currently has £12.5billion assets under management, up 41% on the end of last year.
The company was founded in 1984 and listed in February 2021 at 420p per share, but was trading last week at only about 385p - despite the growth in assets.
Mr Fairman, who retains a 30% stake after offloading almost £100million of shares at the IPO, said Foresight could be taken private again unless its valuation improved from the "ridiculous" level which was about "half what we should be", based on recent comparable deals.
Earlier warning from SSE
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.
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."