The article analyses the EU policies of promoting renewable energy sources (RES), including the role of state subsidizing and the change of EU policy in 2013. First EU actions in this area were implemented in late 1990s. In mid 2000s the European Commission developed integrated approach of the encouragement of renewables. Promotion of RES was integrated with other areas of the EU energy policies in the framework of the Climate and Energy Package in 2007. The paper evaluates EU achievements and development of particular types of RES in the EU in 2000s. A comprehensive comparative analysis of the cost of different types of RES and the use of incentive measures in the European Union and EU member states is carried out. The conclusion is made that despite the impressive technological progress the renewable energy, with rare exception, is still uncompetitive with the traditional sources of energy in terms of costs. A large-scale state support was the reason for the rapid development of renewables in the EU. Article investigates distorting effects of RES subsidies on the market price of electricity. Feed-in tariffs, investment grants, quotas and tax benefits were the most widespread forms of direct and indirect RES subsidies in the EU. During the economic crisis, these subsidies have become a heavy burden for the budgets of the EU countries and population. Now the EU is modifying its strategy on RES in order to reduce the volume of subsidies. In 2013 European Council substantially changed the priorities of the EU energy policies: instead of «sustainable energy» it accentuated the need to provide a “competitive energy”. Strategic decision to reform the existing methods of RES subsidizing and to develop an «economically reasonable» support scheme was made. The reduction of subsidies will inevitably lead to a sharp reduction in the rate of growth of renewables and the failure to achieve previously agreed EU targets.