With the UK government looking at all ways to raise more cash, analysts say one option might be to extend the energy profits levy (EPL) as an alternative to a controversial energy cap on renewable electricity generators.
This would see renewable generators charged a windfall tax, combatting price hikes that have seen them make record profits this year after the Russian invasion of Ukraine caused gas prices to soar.
Previously, in response to the proposed revenue cap, renewables firms argued this would deter investment but a method similar to the oil and gas sector would include offsets in the form of tax breaks on future projects.
The current levy on oil and gas suppliers, which sees them pay a total of 65% tax on profits, includes incentives for companies to invest including a 91% tax break for new North Sea developments.
Something similar might be introduced for the renewables according to City experts and Liberum’s Alternative Funds Team believes an EPL extension is increasingly likely as a way to generate additional revenue plus encourage more renewable investment.
SSE shares rose 1.3% to 1,575p.