If Renewables Were Really Cheaper, They Wouldn’t Need £8 Billion a Year in Subsidies

By any normal definition, an energy system that requires permanent state support, permanent price guarantees, permanent grid underwriting and permanent market rigging is not an energy system at all. It is a fiscal programme with turbines attached.

This week, the Financial Times quietly reported that Britain’s renewable subsidy bill has climbed above £8 billion a year, and that ministers are now trimming indexation because the scheme has “overcompensated generators” following inflation【1】. The government insists this is about “value for money”. Investors warn that even this modest adjustment risks “damaging confidence”. That alone tells you everything you need to know about the real economics of wind and solar.

If renewables were genuinely the “cheapest power in history”, as ministers endlessly claim, they would not collapse at the first hint of subsidy reform. They would not require 20-year inflation-linked price guarantees. They would not require priority grid access. They would not require permanent backup from gas. And they certainly would not require the largest grid rebuild in British history to stop the system they destabilise from falling over.

The central problem is not political. It is physical. Wind and solar do not produce power when the system needs it. They produce when the weather allows. In winter anticyclones , cold, still, high-pressure systems. Britain’s wind fleet regularly produces almost nothing at precisely the moment demand peaks【2】. Solar, meanwhile, produces most of its output in summer, at midday, when demand is weakest【3】. A power system is not about energy over a year. It is about supplying exact power at exact moments, with exact stability.

Because wind and solar are not dispatchable, the system must maintain a complete parallel fleet of backup generation , mostly gas , to cover their absence【4】. That means consumers are not paying for one system, but two. Worse still, as renewable penetration rises, the grid itself must be rebuilt to cope with long-distance transmission, unstable inverter-based generation, and frequency control problems that never existed in the old synchronous system【5】.

None of these costs appear in the advertised “cheap” price per megawatt hour. They are socialised, hidden in network charges, balancing costs, constraint payments and capacity market subsidies. The generator is cheap only because the system around it is becoming ruinously expensive.

There is a further, fatal economic flaw. Wind and solar destroy their own market. When the wind blows or the sun shines, they all produce at once, flooding the grid and crashing prices , often to zero or even negative【6】. This is known in energy economics as “cannibalisation”. The more renewables you build, the less profitable renewables become. In a real market, this would halt investment. In Britain, it merely increases the size of the subsidy required to keep the game going.

This is why carbon taxes and emissions penalties exist. Strip them away, and gas becomes cheaper overnight. Nuclear becomes obviously superior. Wind and solar become uncompetitive almost immediately【7】. The market must therefore be permanently rigged: reliable generation is punished, unreliable generation is rewarded, and consumers are told this is “the cheapest transition in history”.

The industry itself is now admitting the truth. RWE, one of Europe’s largest renewable developers, has openly stated that new offshore wind projects no longer make sense without guaranteed state support【8】. Ørsted has written down billions. Projects across Europe and the UK are being delayed, renegotiated, or quietly abandoned unless governments increase subsidies.

Yet ministers still insist this is “the future”, even as they shovel another £20 million here, £100 million there, and £8 billion a year everywhere else just to keep the machine turning.

The Financial Times article reveals the deeper fear: even a small reduction in subsidy indexation risks spooking investors【1】. In other words, the entire sector is now a leveraged financial structure dependent on political promises rather than engineering or economics.

Try a simple thought experiment. Abolish subsidies. Abolish Contracts for Difference. Abolish priority dispatch. Abolish carbon price distortions. What happens? No new wind is built. No new solar is built. Existing projects collapse into refinancing crises. Gas dominates again. Nuclear suddenly looks rational. Grid stability improves. And electricity prices fall.

That is the test of reality.

None of this means Britain should reject technology or progress. It means we should stop confusing ideology with engineering. A modern, resilient, affordable energy system is built on dispatchable power, system stability, and physical reality , not weather dependency, financial engineering, and permanent state support.

The most honest sentence in the entire energy debate is this:

If something only exists because the state forces everyone to buy it, subsidise it, and rebuild the entire system around it, it is not an energy source. It is a fiscal programme.

Footnotes

【1】 Financial Times, UK cuts subsidies to ‘overcompensated’ renewable power groups, 28 Jan 2026.
【2】 National Grid ESO winter low-wind events; multiple system stress warnings 2024–2025.
【3】 UK seasonal demand vs solar output profiles, DESNZ / ESO data.
【4】 Capacity Market and backup generation requirements, National Grid ESO.
【5】 NESO “Beyond 2030” grid reinforcement plans; synchronous condensers, inverters, stability systems.
【6】 Ofgem / Elexon negative pricing and curtailment data.
【7】 BEIS / DESNZ carbon price support impact assessments.
【8】 RWE statements on offshore wind viability, 2025–2026.