By Ben Leach and Richard Gray Published in the Sunday Telegraph: 8:45PM GMT 23 Jan 2010 Photo by PA
The Ofgem report will show that over the past three years the subsidies have added a total of £32.50 to the average household's electricity bills.
The hidden levy is part of a Government scheme to force energy companies to fund green energy. The companies bear the cost but pass it on to consumers in the form of higher bills.
The amount raised has climbed steeply since the introduction of the levy in 2002.
Next month's annual report from Ofgem, the energy regulator, will show that it has risen above £1 billion for the first time, according to analysts at the Renewable Energy Foundation (REF), a green energy think-tank.
It means that renewable energy added an an estimated £13.50 to the average household electricity bill last year. An additional burden fell on industrial users of electricity, who in turn passed on costs to their customers.
Critics claimed that the subsidy scheme unfairly penalised consumers and was being used to fund "unrealistic" plans to increase the use of wind power. Countryside campaigners have expressed concerns at the number of wind farms being built around the country, as the Government tries to meet its target that 30 per cent of the UK's energy should be generated from renewable sources by 2020.
The Ofgem report will show that over the past three years the subsidies have added a total of £32.50 to the average household's electricity bills. The annual cost has steadily risen from £7 in 2007 to £13.50 in 2009.
The proceeds of the levy, known as the Renewables Obligation (RO), are divided between the main renewable energy sources, with wind receiving 40 per cent, landfill gas 25 per cent, biomass 20 per cent, hydroelectric 12 per cent and sewage gas 3 per cent.
Dr John Constable, director of policy and research at the REF, said: "The fundamental problem with the RO is that the cost to the consumer is extremely high. "Since the cost of the scheme is passed onto businesses as well as households, there will also be a significant impact on the economy. "The Government's plans for wind are wildly unrealistic. Wind power is going to be very expensive, very difficult and ultimately very costly."
The cost to consumers of the RO scheme has risen from £278 million in 2002/3 to £1.04 billion last year, the Ofgem report is expected to say - a total of £4.4 billion over seven years.
The scheme works by requiring energy suppliers to obtain a set percentage of the electricity they provide to consumers from renewable sources. In 2008/9 this figure was 9.1 per cent, compared to 7.9 per cent in 2007/8.
For each megawatt hour of renewable energy bought by a supplier from a generator, suppliers must also buy a certificate as proof. If suppliers fail to meet their obligation by presenting enough certificates, they must pay a fine known as a "buy-out". The cost to energy suppliers is passed on to consumers through their bills.
Ofgem predicts that the total cost of the RO to consumers between 2002 and 2027, when the scheme is set to end, will amount to £32 billion. By 2020 it is estimated that the annual cost will be running at over £5 billion. Prof Ian Fells, emeritus professor of energy conversion at the University of Newcastle upon Tyne, said money that was being invested into wind farms through the RO scheme needed to be diverted elsewhere.
He said: "Consumers simply don't realise the cost to them of supporting the renewable energy industry. Not only is there a cost to consumers but there is a cost to businesses as well.
"So people will not only see the huge cost of the RO scheme in their household bills but also on the High Street, as they see shops put up prices to meet the rising cost of electricity. Subsidising wind farms is far too expensive, and the money could be better spent by investing in other forms of power."
A spokeswoman for the Department of Energy and Climate Change said: "To ensure we meet our climate change goals we need a massive increase in low carbon energy and that includes renewables. "The RO is helping that expansion happen with the amount of electricity generated from renewables trebling since 2002. "We also need to make sure we have continued secure energy supplies in the future and renewables are part of that too. There's no high-carbon low-price alternative – we must move to low-carbon sources."
There are currently 270 wind farms with 2,775 turbines in operation, with plans for a further 10,000 on and around Britain's shores.
It has raised concerns in communities that hundreds of acres of rural landscapes will have wind farms built on them.
Last week The Sunday Telegraph revealed how 14 of the UK's officially-designated beauty spots could soon be blighted by turbines, which can reach more than 400ft in height.