Cuts to wind and solar farm subsidies will push up household bills, one of Britain's biggest green investment funds has claimed.
Greencoat UK Wind on Tuesday warned that proposed changes to the way the Government calculates support for renewable projects would "inevitably erode investor confidence".
This would cause lenders to view UK projects as riskier and demand higher returns on their capital, which Greencoat claims would "substantially" increase costs for households and businesses, who ultimately pay for new energy infrastructure.
On Tuesday, the Government said it "did not recognise" the claims.
Greencoat's objections relate to the Renewables Obligation (RO), a subsidy that was closed to new entrants in 2017 but has become one of the biggest levies on consumer bills.
For a household paying about £958 per year for electricity, around £102 goes towards paying for the RO.
The scheme was designed to incentivise the rollout of green energy.
It allows wind and solar farms to top up their income from electricity generation by issuing them with certificates, which they also sell to energy suppliers.
The minimum "floor" price of these certificates is set by the Government and increases in line with the Retail Prices Index (RPI) – a measure of inflation which delivers higher increases than the Consumer Prices Index (CPI).
But in a recent consultation, the Energy Department proposed switching the RO scheme to CPI, arguing the RPI link had handed generators overly generous returns and the shift would reduce the burden on consumers .
It said: "To address concerns around overcompensation and ensure a fairer inflation adjustment mechanism for the RO, the UK Government ... [is] considering two options for transitioning from the Retail Price Index (RPI) to the Consumer Price Index (CPI).
"Both options aim to deliver a more proportionate approach to inflation indexation, reduce costs to consumers and align with broader government and regulatory policy."
The first option would see the scheme immediately switch to CPI inflation.
The second would freeze the RO floor price at current levels, then only begin increasing it again once the backdated CPI price surpassed that figure.
According to the Government, the second option would result in annual savings for consumers of £820m by 2031-32.
But renewable developers have hit out against the proposals.
Greencoat said: "Investors have made good faith investments into UK renewable energy projects based on stable, government-backed, inflation-linked support.
"Retrospective revision to the RO will inevitably erode investor confidence.
"We anticipate that investors will demand a higher return on new investments to compensate for the risk of further government intervention.
"A small increase in the cost of capital would substantially increase the cost to consumers of new renewable energy projects and can reasonably be expected to outweigh the purported savings to consumers and so serve to increase, rather than decrease, bills ."
A Department for Energy Security and Net Zero spokesman said: "We do not recognise these claims.
"By reforming legacy schemes, we're delivering better value for bill payers – saving millions while supporting lower energy bills for energy-intensive companies.
"This supports our clean energy mission, which will get us off the roller-coaster of fossil fuel prices and provide businesses and households with lower bills for good."
