Energy giants will be handed more than £1.2 billion from wind and solar farms as gas prices soar in the coming months, despite the cost of living crisis hitting household bills. 

When electricity prices are low, wind and solar farms are paid subsidies in the form of green levies taken directly from household bills. Last year, this amounted to around £30 of the total £176 of green levies included in energy bills. 

When wholesale electricity prices are high, renewable producers pay money back to the Government. But rather than the money going directly to households, it is passed back to energy suppliers, The Telegraph has learnt.

In the first six months of this year, wind and solar producers are predicted to pay back £1.2 billion as gas prices soar, pushing up the wholesale electricity price – a potential saving of around £40 per household. 

The total figure is set to rise as renewable energy becomes cheaper to produce and could hit as much as £26 billion in 10 years – a saving of up to £330 per household, if gas prices remain high, according to analysis shared with The Telegraph.

‘Handy dose of economic aspirin’

Senior Tory figures have called for reform of the green subsidy system, to allow the dividends from cheap renewables to be passed through directly in the form of lower household bills.

“Most UK renewable energy costs less than it used to, just as international gas prices are going through the roof. So recycling the savings from renewables straight into everyone’s energy bills makes sense,” John Penrose, a Conservative MP, told The Telegraph.

“It would create a built-in price stabiliser for hard-pressed households and businesses, giving everyone a concrete example of how net zero can help our finances.”

He said it would also “provide a handy dose of economic aspirin for the Chancellor, who would have one less headache to deal with in his budget next month”.

Sam Hall, the director of the Conservative Environment Network, said: “With consumers reeling from surging fossil fuel prices, the Government should look at whether payments from cheap British renewables can be returned to bill payers to relieve the cost of living.”

Philip Dunne MP, chairman of the parliamentary Environmental Audit Committee, said it was important that these dividends were passed on to households. 

“As renewable projects scale up, it is likely that bills will be reduced for millions of consumers as renewables are often cheaper than high carbon energy such as oil and gas,” he said. “Suppliers must make sure that this green dividend is passed on in full to bill payers as a return on their investment in renewables.”