Thursday, February 2 2023 Sign In   |    Register

News Quick Search



Front Page
Power News
Today's News
Yesterday's News
Week of Jan 30
Week of Jan 23
Week of Jan 16
Week of Jan 09
Week of Jan 02
By Topic
By News Partner
Gas News
News Customization


Pro Plus(+)

Add on products to your professional subscription.
  • Energy Archive News

    Home > News > Power News > News Article

    Share by Email E-mail Printer Friendly Print

    How Will The Electricity Generator Levy Work?

    November 22, 2022 - By Mr Gus Wood


      The introduction of a new UK tax on renewable and nuclear electricity generators was confirmed in the recent Autumn Statement. Given the cost of funding the Energy Price Guarantee and the Energy Support Scheme, the introduction of such a tax had seemingly become inevitable.

      As commentators have been quick to identify, the introduction of this new electricity generator levy risks undermining investor confidence, and curbing investment in new sustainable electricity generation, at a time when the UK needs to be investing more in these technologies. For their part, the government maintain that the levy will only apply to extraordinary profits and will not harm investment - so have they struck the right balance?


      Which generators and technologies are in-scope?

      • The levy will apply to renewables and nuclear in the UK.
      • It won't apply to electricity storage.
      • It won't apply to generators with a Contract for Difference.
      • The levy will be assessed on a corporate group basis.
      • The levy won't apply to corporate groups with annual generation of less than 100 GWh.

      The levy calculation

      45% of [Generation Receipts - Electricity Generation x Benchmark Price - Allowance]

      • Generation Receipts = total receipts of a group from in-scope electricity generation.
      • Electricity Generation = electricity generated from in-scope generation (in MWh).
      • Benchmark Price = L75 per MWh.
      • Allowance = L10 million per annum for the group.

      Calculating Generation Receipts

      This will be the most complicated aspect of the levy.

      The government has said that the measure of revenue will cover revenue from all potential routes to market, including revenue from:

      • electricity sales;
      • accepted balancing market offers;
      • the net impact of imbalance settlement; and
      • gains or losses on financial derivatives used to hedge sales.

      However, the government has said that revenue from Renewables Obligation Certificates and the Capacity Market will not be included (and one therefore assumes the same for Feed-in Tariff and REGOs).

      The government has identified the complication of dealing with vertically integrated generators who sell their output to a downstream supply business, but the answer here could be difficult.


      The levy will take effect from 1 January 2023, and will be set to apply until 31 March 2028.

      Read the original article on

      The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

      Mr Gus Wood

      Gowling WLG

      Suite 1600, 1 First Canadian Place

      100 King Street West



      M5X 1G5


      Tel: 4168627525

      Fax: 4168627661




    Other Articles - Utility Business / General


       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2023 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.