- Impact of Carbon Price Support removal estimated to be less than 0.5 pence per share
- Increase in Electricity Generator Levy not expected to have a material impact
Octopus Renewables Infrastructure Trust, the diversified renewables infrastructure company, has provided an update on the expected impact of the UK Government's plans to remove Carbon Price Support ('CPS'), alongside the wider energy policy measures announced yesterday.
Removal of Carbon Price Support
The Company notes the UK Government's announcement on 16 April 2026 of its intention to legislate for the removal of CPS with effect from April 2028. CPS is a UK-specific tax on fossil fuels used in electricity generation, designed to support a minimum carbon price. It has historically contributed to wholesale electricity prices in periods where carbon-emitting generation sets the marginal price.
The Company's valuation assumptions had already reflected an expectation that CPS would reduce over time and become less influential as renewable penetration increases.
Based on initial analysis, the removal of CPS is expected to reduce the forecast electricity price captured by the Company's UK assets (where no existing hedges are in place) by approximately £2-3/MWh from April 2028, with the impact declining over time. This analysis incorporates input from the external consultants which provide the power price forecasts used in the Company's valuations. The corresponding estimated impact on the Company's NAV is less than 0.5 pence per share, reflecting the Company's high level of fixed revenues and geographically diversified portfolio.
This assessment is preliminary and subject to refinement as updated power price forecasts are received.
Wider UK Energy Policy Announcements
The Company also notes the UK Government's broader package of energy policy measures announced on 21 April 2026, aimed at reducing the link between gas prices and electricity prices in Great Britain. These measures include:
- An increase in the rate of the Electricity Generator Levy ("EGL") from 45% to 55%
- The proposed introduction of voluntary long-term fixed price contracts for existing low-carbon generators, subject to consultation
Based on an initial assessment, the Company does not expect the change in the EGL rate to have a material impact on its valuation.
The proposed fixed price mechanism may provide an opportunity to secure additional long-term fixed revenues.
The Investment Manager will continue to monitor these developments closely and will update the market on any material valuation impacts as further information becomes available.
Source: Octopus Renewables
