Ministers say the move would ensure consumers and businesses pay a fair price for energy.
There is little detail about how the revenue cap would work, but the Department for Business, Energy and Industrial Strategy said it would launch a consultation shortly.
"We have been working with low-carbon generators to find a solution that will ensure consumers are not paying significantly more for electricity generated from renewables and nuclear."Labour said Liz Truss's government had been "dragged kicking and screaming" to make the change But Labour claimed the proposal showed the Conservatives has accepted the principle of a windfall tax on excess profits of electricity generators.
Dan McGrail, chief executive of RenewableUK, said that the move risks sending the "wrong signal" to investors in renewable energy in the UK, and skewing investment towards fossil fuels.
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