THE Government is subsidising wind farms and other forms of renewable energy with £1 billion of taxpayers' money every year, it is revealed in a new report.

Westcountry wind farm protesters and MPs have reacted angrily to the news that electricity customers are footing the bill for the hefty payout for the renewable energy industry, branding it a "stealth tax".

The levy, paid by energy utilities to the Government, has added £13.50 a year to every domestic power bill.

The study by the energy watchdog Ofgem, due to be published next month, shows that over the past three years, subsidies have added a total of £32.50 to average household electricity bills.

The secret levy is part of a Government scheme designed to force energy firms to fund green energy.

But the cost is simply being passed on to the customer. Mark Huntley-James, of North Cornwall Anti-Wind Turbines, accused the Government of "dishonesty".

He said: "What I find most annoying about these subsidies is that the Government is being fundamentally dishonest. This is a massive subsidy which is effectively a stealth tax. The Government has passed legislation which essentially forces energy companies to play the part of tax collectors."

Mr Huntley-James said that wind farms were economically unviable and that the Government was ignoring other renewable energy forms.

"Per unit, it costs two-and-a-half times more to generate electricity from a wind farm than from a combined heat and power plant."

He added: "The Government is trying to turn something uneconomic into something economic."

Geoffrey Cox, Conservative MP for Torridge and West Devon described the Government-agreed levy as a stealth tax.

And he said that the Government was not pursuing an economically sound green energy policy to combat climate change.

He added: "A few months ago the Public Account Committee condemned these subsidies because on-shore wind turbines are simply not value for money.

"Offshore wind turbines are spectacularly bad value for money. It's a disgrace the electricity customer is having to meet the cost this folly.

"The Government has failed to bring on other green technologies which are better value for money. It's simply green tokenism."

The amount raised from the controversial levy has soared since it was first introduced in 2002.

Next month's annual Ofgem report will show that, according to analysts at the Renewable Energy Foundation (REF), a green energy think-tank, that for the first time since its inception the payout has exceeded the £1 billion mark.

The research shows that last year, renewable energy added an estimated £13.50 to the average household electricity bill.

An extra burden fell on industrial users of electricity, who in turn also pass on costs to their customers.

Money generated through the Government scheme, known as the Renewables Obligation (RO), is carved up between the main renewable energy sources.

Wind takes 40 per cent of the proceeds, landfill gas gets 25 per cent, biomass 20 per cent, hydroelectric 12 per cent, while sewage gas receives 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 on to 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 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 said 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 more than £5 billion.

A spokesman for the Department of Energy and Climate Change defended the RO scheme saying it was needed to fight climate change.

He 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 to 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."