The UK’s tax on renewable energy generators, which seemed badly thought out from the start, is failing in a number of ways, analysts say, and there will be hopes that there can be a U-turn at the upcoming autumn statement.

Chancellor Jeremy Hunt unveiled the electricity generator levy (EGL) this time last year, implementing the 45% tax from the start of 2023.

But both the renewable energy sector and City analysts have criticised the structure of the levy, saying it is blocking the development of renewable energy and could see the government miss its net zero goals, with investor confidence damaged and scope for further new investment reduced.

“We think the UK’S EGL is a good example of state meddling in the investment landscape, with the end result being that investor confidence has been damaged and scope for further new investment has been reduced,” said analysts at broker Stifel.