A recent report has revealed that green energy subsidies in the UK are costing consumers a staggering £25 billion a year—nearly half of the entire defense budget. This study, released by the Renewable Energy Foundation (REF), highlights what many are calling Britain’s “unsustainable and ludicrous” spending on renewable electricity, totaling £220 billion since 2002.
According to the report, British households are unknowingly contributing about £2.5 million each day, or £1 billion annually, to support renewable energy schemes. This expenditure is more than two-and-a-half times the total mental health budget for the NHS and is comparable to the costs of maintaining the UK’s transport network. Alarmingly, this amount exceeds the combined funding for every police force in England and Wales by £7 billion.
The findings challenge the government’s assertions that renewable energy is becoming more affordable. Instead, the report indicates that the costs associated with green power are only increasing, with no clear exit strategy on the horizon.
The analysis points out that these subsidy costs disproportionately affect low-income households. The energy policies, designed to promote a transition to renewable sources, are viewed as a “stealth tax” that particularly burdens the least well-off. Dr. Lee Moroney, one of the report’s authors, stated, “This isn’t just a green levy—it’s damaging living standards and productivity. The public deserves to know the truth about what’s happening to their money.”
The report outlines ten different subsidy mechanisms, including the well-known Renewables Obligation (RO), which has cost consumers around £90 billion since its introduction in 2002. Under this scheme, electricity suppliers must buy a set amount of power from renewable sources, passing on the costs to consumers.
The Feed-in Tariff (FiT) scheme, designed to support small-scale solar installations, has also come under fire. Critics argue that it acts as a “reverse Robin Hood” policy, benefiting wealthier households while low-income families bear the financial burden through their energy bills.
Dr. John Constable, director of REF, emphasized that subsidies for renewable generators now account for about 40% of the total annual national cost of electricity in the UK, while failing to deliver any significant benefits. “This is unsustainable,” he cautioned. “While climate policy is rational, our current approach is not.”
The report also highlights the Contracts for Difference (CfD) scheme, which guarantees renewable energy generators a fixed price, shifting the burden to consumers when market prices drop. To date, CfDs have cost around £7.8 billion, with expenses likely to rise as more large-scale wind and solar projects come online.
Additionally, hidden “stealth subsidies” have emerged, such as constraint payments to wind farms when surplus power cannot be absorbed by the grid. Britain is currently paying nearly £180,000 an hour to switch off wind farms, amounting to up to £180 million a year.
Dr. Moroney noted that these costs are not just an energy issue; they permeate everyday life, affecting prices from food to transportation. The report reveals that the cost per megawatt hour (MWh) of renewable electricity has actually risen by 50% since 2005, now standing at £200/MWh despite two decades of subsidies.
The study links rising subsidy costs to a decline in electricity consumption, which has fallen by 23% since 2005. This trend, the authors argue, is not due to increased efficiency but rather a direct consequence of families and businesses cutting back due to high bills.
The REF researchers warn that the financial burden of the UK’s green energy transition has become permanent and unsustainable, with no clear plan for resolution. They are calling for an urgent cap on green energy subsidies, cautioning that without reform, costs could soon exceed £30 billion annually.
The Renewable Energy Foundation is advocating for full transparency regarding green levies and VAT impacts, urging that energy bills clearly outline renewable charges so households understand where their money is going.
As the debate over the financial implications of the UK’s energy policies continues, it is clear that a reevaluation of the current approach is urgently needed to ensure a sustainable and fair energy future for all.
