Net zero subsidies cost British households £280 a year
Britain's green energy subsidies have added an estimated £280 to households' energy bills, research has found.
Levies used to encourage construction of wind farms, solar parks and other renewables have added £25.8bn a year to energy bills paid by both households and industry, according to a study from the Renewable Energy Foundation (REF).
The charity said the cost of the subsidies were a key factor in the UK's sky-high electricity prices and blamed them for accelerating the decline of British industry.
John Constable, REF's director, said: 'Renewables subsidies are now costing £25.8 bn per year – or over £900 per household annually – about one third of which, £280, will hit the average domestic electricity bill directly.
'The remainder, £650, impacts households through general cost of living increases – as businesses like supermarkets recover their share of the green subsidy costs through increased prices.
'This is intolerable. It simply can't go on.'
REF's estimate of the direct cost of green energy subsidies on household bills is strikingly similar to the £300 that Labour promised bills would decrease by if the party came to power and moved Britain's energy system to renewables.
That claim has become a source of controversy since their election win last year, with Ed Miliband, the Energy Secretary, repeatedly challenged to show bills are going down.
Average bills rose by 6.4pc, or £111 a year, when the latest energy price cap took effect last month.
A Government spokesman disagreed with the REF figures used in the report and said it 'ignores the benefits of clean power and significantly misleads on the cost of renewables'.
REF analysed the cost of 10 separate subsidy schemes imposed on homes and businesses by successive governments since 2002.
The report, which was based on government data, is thought to be the first to draw together the cost of the UK's many green subsidies and the levies that support them.
The most expensive subsidy was the Renewable Obligation scheme set up in 2002, which offers wind solar and other renewable producers guaranteed subsidies for two decades after they start generating. It cost an estimated £6.8bn in 2023.
Its surging costs saw it blocked for new entrants in 2017, but companies accepted before then can still get payments up to 2037. It currently adds £89.26 to the average domestic fuel bill, according to separate data from analysts Cornwall Insight.
REF said the total £25.6bn cost of such subsidies now accounts for more than a third of the £71bn spent on electricity in the UK in 2023, the most recent year it looked at. It means such subsidies are key factors in setting the UK's power prices, which are among the world's highest.
It said: 'There can be little doubt that renewable electricity subsidies are a significant factor in the cost of living crisis and are very likely to be an important element underlying the weak growth in productivity in the UK economy since the financial crisis of 2008.'
The latest Government analysis of electricity demand in 2024 said industrial power consumption had fallen by 22pc since 2010, while commercial and domestic consumption both fell by 22pc.
Andrew Bowie, the Conservative shadow energy secretary, said: 'Ed Miliband can try to perpetuate the fiction that his net zero targets will save people money, but this research reveals the true cost of prioritising climate targets over cheap energy.
'Under new leadership, the Conservatives have been clear that the cost to families of net zero by 2050 will be far too high. Sir Keir Starmer must rein in his ideological Energy Secretary and urgently change course.'
The Government argued that the subsidies were accelerating the move to clean energies and reducing UK vulnerability to future surges in gas and oil prices.
A spokesman said: 'As shown by the National Energy System Operator's independent report, clean power by 2030 is achievable and will deliver a more secure energy system, which could see a lower cost of electricity and lower bills.'
Ana Musat, of Renewable UK, the wind industry trade body, said: 'Looking at the cost of financial support for renewables in isolation is misleading, as it does not reflect the contributions of the sector to the economy.
'Offshore wind alone is attracting billions of pounds of new investment to this country, supporting 32,000 jobs, and this is set to rise to 100,000 by 2030.
'We're also expecting subsidy costs to begin falling in the near future, with a £1.8bn reduction for billpayers starting in 2027.'
Many of the subsidy schemes now overseen by Mr Miliband were set up by the previous Conservative or coalition governments.
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