The UK Treasury is reportedly planning to cut the funding for GB Energy in June’s spending review.
The publicly-owned company was set up by the Labour government to drive forward its clean energy superpower mission.
According to the Financial Times, the company had been promised £8.3bn in taxpayer money over the five-year parliament – but ministers are now debating whether they can afford the full amount.
Ministers are carrying out a “zero-based review” of all government spending and whether it is still a priority, it was reported on the FT.com website.
In October’s Budget, GB Energy received £100m to cover the first two years.
Sources told the Financial Times that the doubt over funding comes amid mounting pressure on government finances and a move towards greater spending on defence.
According to the report, one option on the table is cutting the £3.3bn that was previously set aside for GB Energy to fund low-interest loans via local authorities for projects such as rooftop solar panels and shared-ownership wind farms.
Neither the Treasury nor the Department for Energy Security and Net Zero said GB Energy was still guaranteed the £8.3bn, the Financial Times said.
There is uncertainty in the industry over what role GB Energy will play in the rollout of low-carbon electricity schemes in the UK, especially as offshore wind already attracts significant private sector funding, the report added.
The government was quoted in the report as saying: “We are fully committed to GB Energy, which is at the heart of our mission to make Britain a clean energy superpower and to ensure homes are cheaper and cleaner to run.”