Green energy subsidies make it too costly to keep the lights on In 2007, Tony Blair first committed the country to produce 15 per cent of its energy from renewable sources, in particular wind and solar (up from the current figure of 4 per cent). Because these forms of generation are dependent on the weather, the Coalition Government has moved on to seek control of all forms of generation, to have any hope of guaranteeing a reliable supply. Virtually all forms of electricity generation - zero, low or high carbon - benefit from subsidies and price supports in one form and another. The Coalition aims to keep the lights on, keep bills affordable and decarbonise energy generation. In fact, worries about the lights going out have intensified as the country becomes more dependent on the weather for its electricity. Converting to wind and solar power is an expensive way to reduce carbon dioxide emissions. Successive Governments expected fossil fuel prices to rise, which would, they claimed, make renewable energy a better option. In fact coal prices have fallen, and gas prices might well do the same as a result of the fracking revolution. The costs of the new policy are extremely high. One German minister said last year that its shift to energy generation based on renewable sources would cost one trillion euros. That is an epic cost, as much as the costs to Germany of bailing out the eurozone. The same logic will apply to the UK unless policy is changed. The Government claims that a full market in energy will return in 14 years" time. Far more likely is that the industry is fully renationalised before then, but this time with foreign governments, such as France and China, owning energy facilities, rather than the UK. The lessons to be learned apply to other areas of government reform. One is to focus economic regulation on expanding competition rather than use it as a tool of government policy. Another is get policy changes exactly right from the start. Although energy privatisation worked, a lack of competition between companies to begin with gave the impression that the benefits were going to shareholders rather than customers. Strong competitive conditions at the outset would have prevented much of the political controversy, which still remains. At his best David Cameron has been a brave defender of free markets and an enterprise economy. Earlier in this parliament he called for a "permanently smaller state," charting a course to lower taxation and stronger growth. Yet in one of the most important areas of the economy, the Prime Minister has presided over the biggest expansion of state power since the nationalisations of the Forties and Fifties. Reversing these policy mistakes is vital if the economic recovery is to be sustained after the general election. Rupert Darwall is a business strategist and former Treasury special adviser. His study How to run a country: energy policy and the return of the State is published today by the independent think tank Reform