Renewables industry warns German windfall tax on profits could scare off investors

Germany's plans for a tax on energy companies' windfall profits generated by the current supply crisis could slow the rollout of renewables because it could put off investors, the country's renewable industry has warned, according to a report by newspaper Frankfurter Allgemeine Zeitung. Policy measures aimed at this winter must not cause problems in the following winter, windpower association BWE said. "The decisive factor will be to overcome the fossil energy crisis in the long term through the rapid expansion of renewable energies. Incentives for rapid investment in expansion should not be thwarted." The planned tax announced by Germany’s government earlier this week is also being debated at the EU level and is supposed to finance a price brake on skyrocketing power prices across Europe. The “random” gains made by some energy companies, who are able to sell their product at a very high price without facing any direct increases in production costs, would be used to provide relief to customers struggling to cope with the quick rise in energy prices.

“When implementing the power price brake, it must be ensured that all measures are in line with the government’s ambitious expansion targets,” Simone Peter, head of renewable power lobby group BEE said. Solar power association BSW warned that taxing profits away from renewable power producers would require “a sense of proportion” and should not become a burden for those “who are now urgently needed to overcome the fossil energy crisis.” If renewable power producers found better investment conditions elsewhere, “they will invest in solar and wind power farms there, but not in Germany,” BSW head Carsten Körnig said.

Germany aims to increase the share of renewables in power consumption to 80 percent by 2030, while they provided just under 50 percent in the first half of 2022. This will require a massive increase in expansion levels for wind power, solar PV and other renewable power sources funded by profit-seeking investors. The German government and the EU have eyed a windfall tax on energy producers as their profit margins have multiplied in the wake of rising energy prices while many energy customers face severe difficulties to pay for their energy bills.