Perth -based SSE will review its investment in renewables going forward following the UK Government’s windfall tax announcement last week.
Chancellor Jeremy Hunt unveiled a 45 per cent levy on electricity generators, among a number of measures for other energy sectors, in his Autumn Statement.
The aim is to target the excess profits that renewable and nuclear operators have made since gas and electricity prices soared following Russia’s invasion of Ukraine.
It comes after SSE reported it more than tripled its profits in the six months to the end of September.
The company reported a 221 per cent increase in adjusted pre-tax profits year on year to £559m.
SSE, which runs gas-fired power stations alongside hydroelectric plants and windfarms, said it invested almost four times as much as it made in profits in the first half of its financial year.
According to its interim results the group invested a record £1.7bn (2021: £1bn) compared to adjusted profit after tax of £489m (2021: £162m) in the six months ending September 30.
However, following the announcement of tax levies CEO of the energy firm Alistair Phillips-Davies told the BBC Today programme that “there is no doubt” SSE will need to review some key investments.
He added: “SSE has always believed in paying our fair share of tax and think a well-designed levy on extraordinary profits, where they are actually realised, is reasonable.
“We also believe in treating the cause, not just the symptoms of the energy crisis and we look forward to hearing more from government about how it will support the massive investment in homegrown clean energy that this country needs to end our dependence on expensive imported gas and cut bills in the future.
“Our commitment to this is clear with a potential £24bn pipeline of shovel-ready projects in the UK that will support thousands of good jobs in communities across the country.
“We will now work constructively with the government to see how this new tax will work in detail and how we can deliver a cheaper, cleaner and more secure homegrown energy system that protects families and business from energy price shocks in the future.”
The Electricity Generator Levy has been introduced because, at present, the price of electricity is set by the most reliable form of generation – gas.
Although this is being reformed, it means many companies who use have been receiving windfall profits for their produced power.
The levy is being placed at a temporary 45 per cent rate on “extraordinary profits” – defined as electricity sold above £75 per megawatt hour (MWh), around 1.5 times the average price of electricity over the last decade.
Combined with corporation tax, that brings the headline rate on earnings to 70 per cent.
The levy will not apply to electricity generated under a Contract for Difference scheme.
