6 points for Governments as you implement the EU’s new revenue cap on power generation

EU Energy Ministers have agreed a new revenue cap for inframarginal power generation of €180/MWh. National governments will now implement this. But they are allowed to deviate from the single EU-wide cap and set different caps for different technologies. 

Herein lies the danger. Poor implementation of the new rules would make it difficult to build new wind farms and would turn investors away.

National revenue caps should therefore follow these 6 points.

  1. Keep the revenue cap technology neutral and ensure it incentivises investments in renewables.
  2. Do not apply revenue caps retroactively.
  3. Avoid changes to the cap once it’s set and give advance notice if the cap is extended.
  4. Avoid capping and taxing the same revenue.
  5. Get generators to assess their revenues on a monthly basis, not less than that.
  6. Factor in how different revenue caps will affect cross border transactions.

Europe will not get out of this energy crisis without more renewables. That means lots more investments. For your energy security and climate targets you need to avoid deterring investors, Governments.