9th Jul 2015 16:16
LONDON (Alliance News) - Renewable Energy Generation Ltd on Thursday said it expects a reduction in earnings before interest, tax, depreciation and amortisation in its current financial year following the UK government's decision to discontinue the climate change levy exemption for renewable-energy generators.
The renewables company said that the climate change levy has been a key component of the renewable support regime in the UK and that it had understood the phase-out would not commence until after 2020, but instead it will occur from August 1.
UK Chancellor of the Exchequer George Osborne said in Wednesday's Summer Budget that he will remove the exemption that generators of renewable electricity have had from the climate change levy. Currently, tax is not paid on renewable electricity supplied to businesses and the public sector under renewable source contracts.
As a result, Renewable Energy expects a reduction in Ebitda of approximately GBP400,000 in the year ending June 30, 2016 for its current operational renewable plant.
The company added that the government's decision to close the Renewables Obligation to new onshore wind generating stations from April 2016 also may result in a non-cash impairment charge of more than GBP0.6 million.
The Renewables Obligation was introduced in 2002, and places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they provide to businesses and households from renewable sources.
"We are surprised by the announcement of the government's intention to discontinue the CCL which has been in place since 2001, specifically to encourage green energy and support renewable investment. Together with the other potential regulatory changes, we are entering a new era for UK renewables. Thanks to our proven expertise across the renewable energy spectrum including wind, solar, bio-power and asset management, REG has multiple options it can deploy to maximise the value of our long pipeline of development assets, and I look forward to providing further updates on our progress," Chief Executive Andrew Whalley said in a statement.
Shares in Renewable Energy closed down 1.0% at 51.85 pence Thursday.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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