Britain’s main energy policy for keeping the lights on has been thrown into chaos after a European court revoked state aid clearance, raising fears about security of supply.

The government said its “capacity market” scheme, which pays power plant owners subsidies to guarantee they are available to generate electricity through winter, had been suspended immediately following the ruling.

Up to £1 billion in payments that were due to be made this winter now cannot be made, denying many energy companies a major source of income and casting doubt on whether their plants can still be relied on if needed.

The ruling also calls into question plans for future winters, for which billions of pounds in subsidies have been awarded. Further auctions to award more payments…