UK Chancellor Rachel Reeves has announced measures aimed at reducing household energy bills, including shifting a large share of renewable-support costs into general taxation.
Reeves said the government will remove 75% of the cost of the Renewables Obligation (RO) scheme for the next three years and will scrap the Energy Company Obligation efficiency programme. The Treasury estimates the changes will cut the average annual household bill by around £150 from April.
Energy UK chief executive Dhara Vyas said the announcement provides long-awaited support for consumers. “The energy industry has for some time called for action to remove policy costs and bring down bills,” she said. “So we warmly welcome the announcement today from the Chancellor, which will give customers some respite from the high energy costs that far too many households have struggled with over recent years.”
RenewableUK deputy chief executive Jane Cooper said shifting some energy policy costs into general taxation would better reflect ability to pay. “It’s fairer, as it’s based on people’s ability to pay, so families on low incomes will benefit most,” she said. Cooper also welcomed measures to make electricity cheaper for industry, saying this would help accelerate electrification and support the sector’s supply chain.
Cooper added that plans to recruit 350 additional planning officers were a “timely intervention” that would “enable us to roll out vital new clean energy capacity significantly faster.” She also highlighted government approval of two new freeports in Scotland and Wales as evidence of renewable energy’s role in revitalising industrial areas. “It’s exciting to see the government approving two new freeports in Scotland and Wales,” she said, noting additional investment for renewable projects in Cornwall.
Solar Energy UK chief executive Chris Hewett said the RO reform had been anticipated. “Reform of the Renewables Obligation is both a welcome and expected move by the Chancellor,” he said, adding that growing solar deployment and electricity market reforms should push bills lower in the coming years.
Vattenfall’s director of public and regulatory affairs, Lisa Christie, said any steps to ease household costs would be welcomed but warned against losing momentum on energy infrastructure. “It’s equally important that we maintain the pace and ambition of rebuilding our critical national energy infrastructure,” she said. “This is the only way to guarantee energy security, deliver stable bills for British households, and strengthen our industrial base to compete globally.”
Craig Lowrey, principal consultant at Cornwall Insight, cautioned that shifting levies does not eliminate the underlying costs of decarbonising the energy system. “Shifting some levies around does not remove the costs of running and decarbonising our energy system, it simply changes how they’re paid for,” he said. “While it may take the sting out of energy bills right now, these costs will need to be picked up elsewhere.”
Aurora Energy Research advisory project leader Marten Ford echoed that assessment, saying the measures provide only partial relief. Funding most RO costs, he said, would deliver “meaningful savings — around 8% of the average annual electricity bill — but this support is only confirmed for the next three years.” He added that long-term reductions will require deeper structural changes to the market and cost-recovery framework, particularly as the UK economy becomes more electrified.
