Big renewables investors getting ready to turn their backs on Europe

EU Energy Ministers will decide today new rules on revenue caps for inframarginal power generation.

Governments need to act to help families and businesses pay the energy bills.

But what is decided today could worsen the energy crisis.

Europe needs big investments in home-grown renewables. Everyone agrees that – and that it’s the route out of the crisis. But as it stands, the emergency Regulation will put many renewables investments on hold.

The Regulation initially aimed at an EU-wide cap on all infra-marginal power generation.  But as it now stands, the Regulation does nothing to stop national Governments from adopting additional taxes and taking uncoordinated measures on different types of power generation.

Some national Governments are already planning new taxes that would come on top of the emergency EU measures.  And these additional measures include taxes on electricity producers’ total revenue, rather than their profits. This will stop renewables investments.

Investors will simply go elsewhere. To the US for example, where the Inflation Reduction Act has big tax credits for renewables investments.

This can be avoided still, but National Governments need to listen to those who are building the renewables.

The message to national Governments is simple: deviating from the EU-wide cap or applying additional taxes on electricity producers will stop renewables investments.  And make it that much harder for Europe to get out of the energy crisis.