Essay by Eric Worrall
Are renewable energy investors in Britain about to experience financial hardship, like Spanish investors in 2010?
UK Energy Secretary Gets Power to Cap Income From Renewables
Energy Prices Bill gives government expansive new powers
Industry warns measures could threaten green energy investment
By Will Mathis26 October 2022, 21:32 GMT+10
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As the government focused on a change in leadership, the bill was making its way through the parliamentary procedure and completed the final stage to becoming law While providing vital support to households struggling with energy costs, it will also allow the state — if it chooses to — to override the country’s energy regulator, by capping revenues of electricity generators and regulating suppliers.
The energy industry has warned that the measures could upend the stable regulatory environment that’s been key to driving investment in UK wind power. Britain’s wind-power industry is one of the largest in Europe, and crucial to the country’s climate goals and ambitions to be independent of volatile fossil fuel markets.
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One aspect of the bill is a cap on revenues from low-carbon power generation like wind farms, solar parks and nuclear plants. The legislation gives the government the power to enact the measure, but leaves the details about the level of the cap to be decided later.
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The British Government’s new power to cap green energy profits has just added to the evidence that renewables could be a high risk investment.
The 2010 Spanish retrospective renewable energy subsidy cut caused a massive wave of bankruptcies, 62,000 investors who mistakenly believed in what they thought was a stable financial arrangement with the Spanish government.
Reading my essays, you might get the impression I don’t care about people who lose money on renewables, but that isn’t the case. Many of the people bankrupted by the Spanish green subsidy debacle were ordinary people, mom and pop investors, who thought they could trust their politicians to keep their promises. Some of the victims of the 2010 Spanish green subsidy debacle ended up losing their homes.
I am not a lawyer, legal expert or investment advisor, but if the British Government exercises these new powers to slash green investment profits, and if the value of green energy investments plummets, it is possible that investors might have a path to receiving legal compensation.
Former HSBC head of responsible banking Stuart Kirk recently claimed there is a lot of pressure on advisors to talk up the prospects of green investments. If this alleged pressure led investment advisors to fail to divulge known risks when offering investment advice, British courts might rule the investment advisors and banks are legally liable for any losses suffered by green energy investors.
In my opinion the risk of severe loss due to arbitrary government profit caps or rule revisions should have been obvious to anyone with expert knowledge of the industry, after what happened in Spain.
If you are in this situation, please don’t take what I have just said as legal or investment advice. As I said, I’m not a lawyer, legal expert or licensed financial advisor. I strongly recommend people who believe they lost money because of defective green investment advice review their individual circumstances with a lawyer, before attempting any legal action to recover their financial losses.
