Green power company Infinis, which is developing two major onshore wind farms in Scotland, has warned that the Chancellor’s decision to scrap the climate change levy for renewable electricity will affect investment in the sector.
The firm also told investors that its profits will be hit by George Osborne’s “disappointing” move in yesterday’s Budget, which has seen share prices fall across the renewable power industry.
Infinis chief executive Eric Machiels said: “The announcement of the government’s intention to discontinue the climate change levy at this time was quite without warning.”
Electricity generated by renewable projects is currently exempt from the levy, which is generally charged at a rate of 0.554p per kilowatt hour on power sourced from the likes of coal and gas.
The Treasury estimates that removing the exemption for green power from 1 August will raise an extra £490 million for the public coffers this financial year, rising to £910m by 2020-21.
Osborne said yesterday: “We will remove the out-dated climate change levy exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad.”
Infinis, chaired by former SSE boss Ian Marchant, said its underlying pre-tax profits would take a hit of about £7m in the year ending 31 March 2016, and up to £11m the following year.
The firm is pressing ahead with its 43 megawatt (MW) A’Chruach development in Argyll and the 66MW Galawhistle project near Douglas in South Lanarkshire, despite UK government’s recent move to also close the renewables obligation subsidy scheme to onshore wind farms from 1 April next year – a year earlier than planned.
Machiels added: “We are disappointed by the several recent changes to the regulatory framework which will disincentivise long-term investment in the build-out of new energy infrastructure in the UK. Infinis generates low cost, reliable, renewable energy and we now look to the government for regulatory stability.”
Osborne’s move also sparked a warning from power generator Drax that its earnings would fall by about £30m this year and £60m in 2016, although it said the impact would reduce in later years.