Government must beware subsidies for renewable energy pushing more households into fuel poverty, a consumer body has warned.

Yesterday the Government announced that it was lowering subsidy levels for some types of energy like onshore wind, potentially cutting spending by more than £1billion, according to DECC.

Announcing the new levels of subsidy for the Renewables Obligation yesterday, Energy Secretary Chris Huhne said they “will overall mean a lower impact on consumer bills, without reducing our level of ambition.”

The subsidy, called the Renewables Obligation (RO), gives money to firms producing green energy. How much money is given out depends on the type of energy, with newer energy sources favoured by the scheme to encourage more investment in them.

But under the new plans the RO is still set to add an extra £50 to household bills by 2016, according to DECC’s calculations.

Audrey Gallacher, Director of Energy at Consumer Focus said the UK needs to be careful about the effect this could have on vulnerable households.

She said: “Investment in making our energy supply more secure and sustainable is obviously essential. However this will mean higher bills in the short-term and unless we take action, that is likely to hit the poorest households hardest and to push more into fuel poverty.

“Our homes will need to become more energy efficient to mitigate the impact of rising costs. The Government’s plans to make sure households get the help they need to stop their homes leaking heat have to deliver.”