The chief executive of the energy supplier SSE has said a windfall tax could damage Britain’s progress on building up domestic sources of electricity and gas as he pledged £24bn of investment.
Alistair Phillips-Davies has said a proposed one-off levy on energy companies could hinder work to build windfarms and other sources of domestic supplies.
SSE on Wednesday promised to spend £24bn this decade including on renewable energy and low carbon projects in a move lauded by the government.
It comes as the chancellor, Rishi Sunak, is widely expected to unveil a package of measures on Thursday to ease the pressure of rising costs on household energy bills. This could in part be paid for by a windfall tax on North Sea oil and gas producers, which have enjoyed outsized profits during the energy crisis.
This week, it emerged the Treasury was also considering widening the scope of the tax to include electricity generators, which may have landed £10bn in excess profits due to surging prices.
Phillips-Davies said the government’s “clear and consistent” policy on boosting green energy had allowed SSE to develop the world’s biggest offshore windfarm at Dogger Bank, located 81 miles (130km) off the north-east coast of England. The government is trying to increase domestic energy supplies after Russia’s invasion of Ukraine.
The SSE chief executive added: “We’ve got a cost of living crisis included in that … crisis around gases and imported energy from the sort of places that we don’t want to deal with any more. Therefore, we can be building those assets and doing that quickly – one to alleviate this problem as quickly as possible now, but also to make sure that they don’t return.
“I would have thought any government would view that as a huge success, and therefore would not want to be changing any of those things.”
Philips-Davies refused to comment directly on whether a windfall tax would prevent specific planned investments, but said £10bn of the £24bn SSE planned to spend was already “locked in”.
The business and energy secretary, Kwasi Kwarteng, said: “This is a significant investment from SSE and a huge vote of confidence in our energy security plans. SSE will help make our energy cleaner and cheaper, while supporting high quality green jobs right across the UK.”
Kwasi Kwarteng, who is opposed to a windfall tax, was speaking as the energy supplier reported profits had increased 15% to £1.5bn in the year to March.
John Musk, an analysts at the investment bank RBC Capital Markets, said investors should be encouraged by the results, but added: “The overhang from potential windfall taxes will likely still weigh until we get clarity one way or another. There are plenty of references to SSE’s investment in the UK throughout results, which are likely a nod to its contribution to the economy in response to the threat of a windfall tax.”
SSE shares, which fell 8% when reports on the windfall tax emerged on Tuesday, recovered – up nearly 6%.
