Renewable Energy Foundation

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The Total Cost of Subsidies to Renewable Electricity in the United Kingdom: 2002–2016

REF is often asked about the total cost of public support to renewable electricity generators, both annually and since the subsidies began.

The following table gives aggregate figures for the administrative years 2002–2003 to 2015–2016. Administrative years run from the 1 April to 31 March the following year.

Year RO (£m) FiT (£m) Total (£m)
2002-2003 278 278
2003-2004 416 416
2004-2005 495 495
2005-2006 583 583
2006-2007 719 719
2007-2008 876 876
2008-2009 1,036 1,036
2009-2010 1,119 1,119
2010-2011 1,285 14 1,300
2011-2012 1,458 151 1,608
2012-2013 1,991 506 2,498
2013-2014 2,599 691 3,290
2014-2015 3,114 866 3,980
2015-2016 3,743 1,110 4,853
Total (£m) 19,818 3,338 23,156

These consumer subsidies are derived from levies added to consumer’s electricity bills, and are therefore regressive in effect. That is to say, they have a disproportionate impact on lower income households compared with those with higher incomes.

The following chart represents the annual data, and adds onward cost projections from the Office of Budget Responsibility:

SubsidyCosts

Figure 1. Renewable electricity subsidy costs 2002 to 2016, solid lines (Source: REF calculations from Ofgem data), and onward costs, dotted lines, as projected by the Office for Budget Responsibility

As can readily be seen extremely rapid growth has occurred since 2010. Since this coincides with the Coalition government of Mr Cameron and Mr Clegg, it should be noted that the Feed-in Tariff was the creation of the previous government under Gordon Brown, when Ed Miliband was Secretary of State for the Department of Energy and Climate Change (DECC).

Subsidies are in principle capped at £7.6 billion (2011-2012 prices) per year in 2020 by the Levy Control Framework, though the framework has a generous 20% headroom. In fact, current oversupply of renewable capacity consented in the planning system suggests that this headroom could easily be overshot , and the OBR’s projections seem entirely plausible, indeed if anything an underestimate.

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