Government to Address Windfall Gains in The Energy Sector With Legislation

PUBLISHED: 15th May 2023

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The General Scheme of the Energy (Windfall Gains in the Energy Sector) Bill 2023 was approved by the Government on 21 March 2023.  

It is the latest development in the Government’s implementation of temporary policy measures to tackle the Russian invasion of Ukraine, which triggered “unprecedented increases in wholesale natural gas prices”.

The draft Bill will implement Council Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices. Its objective is to tackle the issue of windfall gains for entities operating in the energy sector, arising from current market conditions.

The draft Bill provides for the following:

  1. The administration and collection of a temporary solidarity contribution; and
  2. The administration, collection and distribution of proceeds through a market cap on revenues in the electricity sector.

We consider these measures here.

Temporary solidarity contribution

The temporary solidarity contribution is based on taxable profits for companies with “activities in the crude petroleum, natural gas, coal and refinery sectors”. Rather than operating as a tax, it is calculated based on a portion of a company’s taxable profits for the fiscal years 2022 and 2023 which are 20% higher than the “baseline”, being the average taxable profits for the fiscal years 2018 to 2021.

Losses arising prior to 1 January 2018 or post 31 December 2023 are not included in the definition of taxable profits for the years 2018 to 2023 with the aim of ensuring that tangible proceeds can be collected by the Revenue Commissioners with no offset of increases in profits. However, group relief surrendered in an accounting period falling wholly or partly in 2018 to 2018, along with capital expenditure relating to the purchase or construction of tangible assets will be deductible for the purpose of calculating taxable profits.

Proceeds are collected by the Revenue Commissioners and distributed to the exchequer in order to provide financial support to end user customers.

Market cap on revenues in the electricity sector

The cap on market revenues will apply to market revenues obtained from the generation and sale of electricity from the following sources:

  • Wind Energy
  • Solar Energy (solar thermal and solar photovoltaic)
  • Geothermal Energy
  • Hydropower (with or without reservoir)
  • Biomass Fuel (solid or gaseous biomass fuels), excluding biomethane
  • Waste
  • Nuclear Energy
  • Lignite
  • Crude Petroleum Products
  • Peat
  • Hard Coal

The categories of entities to whom the cap may apply include (1) generating units with the ability to generate at least 1 MW of electricity, (2) entities who trade electricity on behalf of such generating units and (3) entities who trade electricity on behalf of either of (1) or (2).  

The cap on revenues is calculated on an average basis per calendar month for the relevant period (December 2022 to June 2023) and is set at the following:

  1. In respect of wind energy and solar energy, €120 per MWh; and
  2. In respect of all other fuel sources, €180 per MWh (with slightly different calculations applicable to hard coal, crude petroleum products, biomass fuel and peat).

The cap will be administered by the Commission for Regulation of Utilities with the objective of lowering prices in the electricity sector for consumers.


The primary goal in implementing Council Regulation (EU) 2022/1854 is to ensure that windfall gains are “collected and redistributed to support energy consumers”.  The Government has emphasised the temporary nature of these measures, which are expected to be revisited by the European Commission following implementation at Member State level. 

At the time of writing, it is expected that this draft legislation will be officially published as a Bill, and enacted before the Oireachtas breaks for its summer recess in July.

For more information, please contact Philip Daly ( or Cian O Lionaird ( from our Energy and Natural Resources team.

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