Skip to content

Renewable Energy Trust Funds Tumble On Osborne Cuts

Money Observer

In his Summer Budget on Wednesday, the Chancellor of the Exchequer announced that The Climate Change Levy (CCL) exemption for renewable energy will be removed, effectively severing valuable income streams to listed infrastructure trusts.

In response shares in UK listed renewable energy trusts tumbled on Thursday. The Renewable Infrastructure Group was one of the hardest hit, with shares sliding 3.8 per cent by mid-morning trading on Thursday to 101.25p.

John Laing Environmental Assets Group also suffered, with shares down 2 per cent on Thursday morning to 103p. Greencoat Wind and Bluefield Solar saw more modest slides, with shares down 1.4 per cent and 1.6 per cent to 107.5p and 106.25p respectively. Foresight Solar was the least affected, with shares down just 0.5 per cent to just 103p.

The regulatory change means that renewable energy companies will no longer receive additional revenue from the sale of Levy Exemption Certificates (LEC), which they have historically sold to other energy suppliers who could purchase them instead of paying the CCL.

In its Budget statement the government says that the removal of the CCL exemption for renewable electricity will ‘correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas and by helping ensure support for low carbon generation provides better value for money’.

The removal is effective from 1 August 2015, with a transition period for renewable electricity generated before that date.

Commenting on the change, investment trust broker Numis Securities says: ‘The government has removed the CCL because it represented an indirect support to renewable energy generation, and more effective support mechanisms targeted directly at renewable generators have been introduced.

‘In addition, one third of the value of the CCL would have gone to supporting renewable electricity generated overseas,’ says Numis.

Full story