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Irish Independent
Irish Independent
John Mulligan Twitter Email

ESB is still ‘committed’ to UK amid tax squeeze

The UK’s finance minister Jeremy Hunt, centre, has announced a 45pc levy on ‘extraordinary profits’ being made by electricity firms. Photo: PA Wire

ESB says it remains committed to the UK market even as it and other operators face a tax blitz by the government there in the face of soaring inflation and an energy crisis that has led to a surge in power suppliers’ profits.

Last week, UK finance minister Jeremy Hunt said a new, temporary 45pc levy on the “extraordinary profits” being made by electricity generators is being imposed.

It will apply to any electricity they sell above a price of £75 (€86) per megawatt hour (MWh). That’s about 1.5 times the average price of electricity over the past decade.

The ESB owns the huge Carrington power station near Manchester, which opened in 2017. The station operates two combined cycle gas turbines, each capable of generating 443MW of power. Together, they can power the equivalent of one million homes.

ESB touts Carrington as one of the most efficient thermal plants in the UK.

“ESB notes the recent decision to place an additional tax on profits on some assets above a set threshold,” said a spokesperson.

“ESB is reviewing the announcement in detail but an initial assessment indicates its impact on the ESB generation portfolio is expected to be small.

“We remain committed to our investments in the UK and continue to assess accordingly, as with all our businesses.”

It has also emerged that ESB’s UK parent has injected a fresh €236m into the challenging Neart Na Gaoithe offshore wind farm project in Scotland.

Recently filed accounts for the Carrington power station show that it posted a £24.4m (€28.1m) profit last year, double that of 2020.

“The increase in profit during the year reflects an increase in running as a result of energy supply pressures in the UK market over the course of 2021,” note the directors in the accounts.

It generated 4,321MWh in 2021 – more than twice what it generated in 2020.

The company behind the power station paid £2.7m (€3.1m) in tax last year compared to £6m (€6.9m) in 2020.

ESB also has a number of operational windfarms in the UK, as well as others that are in the planning process.

It owns a 50pc stake in the massive Neart Na Gaoithe offshore windfarm project in Scotland. The other half is owned by France’s EDF Renewables.

The windfarm will generate up to 450MW of electricity when completed. Onshore work started in 2019 and the first turbine foundation offshore was installed last month.

The windfarm was originally expected to be commercially operational by last month, with that target now extended to next year. The project has been a huge technical and financial challenge. It was significantly affected by challenging seabed conditions and supply-chain constraints as a result of the Covid pandemic.

In 2021, the ESB shouldered a €106m impairment on its stake in the project because it anticipated “significant additional construction costs”.

Recently filed accounts for an ESB holding company in the UK show that it made an additional £110m (€127m) equity investment in the company behind the Scottish project this year, and provided a shareholder loan of £96m (€110m). The ESB also has a retail presence in the UK.

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