In a stark warning to the government, Octopus Energy founder Greg Jackson has revealed that Britain's wind farms are being forced to sell power at a significant loss due to the current energy price cap and windfall tax regime. This unsustainable situation is putting billions of pounds of future investment in green energy at serious risk.
The CEO of the UK's fourth-largest energy supplier stated that the existing windfall tax on renewable generators, designed to capture excess profits during the energy crisis, is having a catastrophic unintended consequence. It is effectively penalising new wind farms that agreed to sell their power at pre-crisis prices long before the market surged.
A System in Crisis
"We've got wind farms being built right now that are going to lose billions because of the way the windfall tax is structured," Mr. Jackson told The Independent. He explained that these projects secured contracts years ago to sell electricity at low, fixed prices to ensure funding. Now, with the energy price cap and the windfall tax, they are being taxed on a theoretical profit that simply doesn't exist.
This flawed mechanism means that for every unit of electricity these new wind farms produce, they could actually lose money. This creates a major disincentive for the very investment the UK desperately needs to achieve its energy security and net-zero targets.
Threat to Net Zero and Energy Bills
The implications extend far beyond corporate balance sheets. This investment strike threatens to derail the UK's transition to a cheaper, cleaner energy system. A slowdown in renewable infrastructure development could keep the nation dependent on volatile international gas markets, ultimately leading to higher energy bills for consumers in the long run.
Mr. Jackson's comments highlight a critical flaw in the government's approach to managing the energy crisis. While aiming to fund support for household bills, the current policy risks suffocating the golden goose of renewable energy that is essential for Britain's future economic and environmental stability.
A Call for Urgent Reform
The Octopus Energy boss is calling for an immediate and common-sense reform to the windfall tax. He proposes a simple solution: the tax should only apply to genuine excess profits, not to projects that are locked into pre-crisis contracts and are not realising the high market prices.
Without such a change, the UK risks seeing a mass exodus of investment in renewables, handing a competitive advantage to other nations and undermining its position as a global leader in climate action. The warning is clear: the government must act now to fix its energy taxation policy or face severe consequences for the country's green ambitions.
