Darling's £0.5bn offshore windfarm 'leccy-bill stealth levy

'3m windmill-powered homes' claim is pure spin

Budget 09 A lot of people are wondering how the British government can deliver colossal bank bailouts and pay rapidly-climbing dole bills - all the while collecting less taxes as people are laid off and companies founder - and yet still find money to subsidise green energy. Chancellor Alistair Darling has found a cunning way around the problem: he will simply raise electricity prices and channel the resulting cash into wind farms.

The process isn't described like that, of course. Mr Darling, presenting the Budget yesterday in parliament, put it like this:

We must build on Britain’s status as the world leader in offshore wind power generation.

The credit squeeze is holding back major offshore wind projects.

I want to lift the barriers – through £525m of new financial support over the next two years for off-shore wind, funded through the renewables obligation.

The potential is enormous. I am confident that this will lead to major projects getting the go-ahead quickly, providing enough electricity to meet the needs of up to 3m households.

This is described in the national dailies thus:

There are currently 300,000 households supplied by energy from offshore wind farms, but the Government has pledged to increase that to 3.1 million with £525 million investment ...

Mr Darling also found £45 million for small scale renewables like wind turbines on houses ...

It seems that even with the revenues shrinking, bills climbing and the government's credit running out, Mr D has managed to find half a billion from the public coffers for offshore wind: remarkable.

Well, it would be remarkable if it were true. But it's not. The public coffers contain nothing but a bit of paper reading "IOU £beaucoup trillions, G Brown", and in fact that half-billion will be found from the pockets of electricity users. You and me, that is.

The key is the phrase "funded through the renewables obligation". If we delve deep (page 148) into the Treasury pdfs which provide detail on Mr Darling's speech, we find what the government actually plan to do.

Budget 2009 announces a banding review with the intention of increasing the banding of Renewables Obligation Certificates (ROCs) from 1.5 to 2.0 for offshore wind projects meeting specified completion criteria if they place new orders in 2009-10, and then 1.75 in 2010-11. This is expected to provide £525 million support from 2011 to 2014, protecting 3 GW of proposed investment over the next two years, enough to power an estimated 2.8 million homes.

The Renewables Obligation scheme is the only reason there is any renewable energy in the UK at all. As renewable juice costs more to make than coal, gas or nuclear - and generally has the added disadvantage that you can't turn it on and off on demand - companies wouldn't normally be able to sell it.

Sponsored: How to determine if cloud backup is right for your servers