Taxpayers have paid more than £1 billion in six months to keep the cost of old renewable energy subsidies off household electricity bills, official figures show.
The money is being paid out under temporary powers from the 2022 energy crisis, which ministers have now had to extend twice, and the Treasury’s own costings stop the support completely in April 2029.
Figures laid before Parliament on Thursday by the Department for Energy Security and Net Zero show the Renewables Obligation to Exchequer scheme cost £530.3 million between July and September, on top of £520.7 million in its first three months.
That takes the total to £1.05 billion by 30 September. The figures cover Great Britain only and do not include the cost of running the scheme.
The Renewables Obligation is the subsidy scheme that has paid wind farms, solar parks and biomass plants for the electricity they generate. It closed to new generators in 2017, but support for some existing generators continues until 2037. Until April, the cost was added to every household’s electricity bill.
At the Autumn Budget 2025 the Government moved 75 per cent of the household share onto the Exchequer for three years. Together with the end of the Energy Company Obligation, ministers said this would take an average of £150 off the costs on energy bills from April.
Households did see a fall. Ofgem cut the price cap by 7 per cent in April, which the Government put down to the £150 of costs removed. Ministers said the measure was paid for by ‘asking the wealthy to pay their fair share’.
But the subsidy has not been cut. It has been moved from bills to the public accounts, where it is met from taxes or borrowing. The Treasury’s policy costings put the bill at £2.58 billion this year, £2.1 billion in 2027-28 and £2.2 billion in 2028-29, almost £6.9 billion in all.
After that the costings show nothing at all. The scheme period set out in the Government’s direction to energy suppliers ends on 31 March 2029, and the Treasury’s figures for 2029-30 and 2030-31 are zero. Ministers have not said what happens to that share of the subsidy cost after March 2029.
The legal footing is also borrowed. Payments are made under section 13 of the Energy Prices Act 2022, which the last Conservative Government passed in October 2022 to fund emergency help with bills after Russia’s invasion of Ukraine.
That power was written to expire three and a half years after the Act was passed, on 25 April 2026. The Act allows it to be extended only six months at a time.
Ministers extended it once earlier this year, to 25 October. A second extension, signed by energy minister Polly Billington on 4 September, comes into force on Saturday and runs to 25 April 2027.
In its explanatory memorandum the department admits that ‘further such instruments will be required until new or amended primary powers’ are in force. It says it intends to bring those powers forward ‘when parliamentary time allows’. On the current timetable, several more six-month extensions would be needed before the scheme ends.
The emergency schemes the Act was built for have all closed. Thursday’s report shows they cost £45.1 billion in total, including £24.1 billion for the Energy Price Guarantee, £11.9 billion for the Energy Bills Support Scheme and £7.5 billion for help to businesses. The Renewables Obligation scheme is now the only one still open.
Northern Ireland is not covered. The department says it is working with the Northern Ireland Executive ‘as they consider developing a comparable offer’, leaving bill payers there without the same reduction for now.
Labour is the Government and Ms Billington, the Minister for Energy Consumers, signed both Thursday’s report and the latest extension. The policy is the Government’s own choice, made at its own Budget.
That leaves her with questions to answer. Why is a £6.9 billion, three-year transfer running on six-month extensions of crisis powers rather than its own Act of Parliament? When will MPs see that Bill? And who pays the 75 per cent from April 2029, taxpayers or bill payers?
Chancellor John Healey delivers his first Budget on Wednesday. The subsidy payments themselves continue until 2037.
Main image: Whitelee Wind Farm, East Renfrewshire, with Arran in the background. File photo. Bjmullan, Wikimedia Commons, CC BY-SA 3.0, cropped.
