In November 2022 the UK Government announced a new, temporary 45% levy on "exceptional" receipts generated from the production of wholesale electricity and published a "technical note" on the operation of the levy. The EGL replaced the earlier proposal from the UK Government to introduce the "Cost Plus Revenue Limit" for low-carbon generators not covered by a CfD contract which were announced in October 2022.
Despite heavy criticism of the move by many clean energy market participants, on 20 December 2022 the UK Government confirmed its intention to press ahead with the EGL by publishing a supplementary technical note and draft legislation outlining the details of how the new tax would operate. The EGL has been introduced from 1 January 2023 and will have an impact on existing and potential investors in the UK clean energy market.
Key features of the EGL are as follows:
Generation receipts – Electricity generation x Benchmark price– Allowable costs – Allowance.
Our multi-disciplinary energy team would be happy to advise on the potential impact of these new developments on current and future hydrogen and renewable energy projects.
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