Low-carbon subsidies on bills will increase, says Decc

The amount of money from energy bills going to support low-carbon generation will increase by 2020, according to the Department of Energy and Climate Change (Decc).

The Annual Energy Statement from the government said £62 (4.5 per cent) of the current bill goes to support cleaner energy and keeping the lights on, but this will be 10 per cent (£131) by 2020.

However, Decc claimed these subsidies, along with other government policies – including energy efficiency schemes – are reducing the typical 2014 energy bill by £50 compared to what they otherwise would be, to £1,369.

By the end of the decade, the government stated its policies would reduce energy bills even further, to £1,319.

It said this is being achieved because increased demand, coupled with less low-carbon generation, which Decc says has lower running costs that gas or coal generation, pushes down the wholesale cost of energy by £5 this year, and £12 by 2020.

Alongside this, last month’s cut to the energy company obligation (Eco), despite strong opposition to the plans, took up to £35 off energy bills.

The came after prime minister David Cameron promised to “roll back green levies” on energy bills in October last year.

Energy secretary Ed Davey said: “We have the best energy security in Europe – and to stay that way we need to deal with a legacy of underinvestment and build a clean, secure energy system based on home grown supplies.”

He added: “I’m determined that while we tackle these challenges, consumers don’t pay a penny more than they have to for the energy they use.”

Davey added bills for energy intensive industries were also being cut by the government, despite policy costs making up 12 per cent of their bill.

He stated that the government has introduced a package which will help to mitigate for 80 per cent of government policy costs by 2020.