Britain’s ambition to become a global leader in renewable energy suffered a major setback last night when the world’s biggest investor in wind power said that it was slashing its investment programme.

The announcement comes less than two months after ministers backed a string of huge gas-fired power stations, prompting concern that the Government cannot fulfil its promise of a green energy revolution.

Iberdrola Renewables’ decision to cut its investment in Britain by more than 40 per cent, or £300 million — enough to build a wind farm powering 200,000 homes — is the latest obstacle to Gordon Brown’s target of generating 35 per cent of the country’s electricity from renewable sources by 2020. Lifting it to that level from the current 5 per cent would cost an estimated £100 billion. But wind energy investments have collapsed as funding dries up in the credit crunch and the price of oil, gas and coal has fallen. Delays obtaining access to the national grid and planning permission have compounded the industry’s woes.

Shell and BP have shelved or pulled out of renewable energy projects, including a £3 billion project for 341 turbines in the Thames Estuary, and questions have been raised over the future of npower’s £2.2 billion Gwint y Mor farm off the Welsh coast.

“We are way off the pace,” Jonathon Porritt, the head of the Sustainable Development Commission, said. “The UK has talked about this for years, but the Government now has very little time to get this together. People just do not consider the UK to be a good place to invest in renewables.” Duncan Ayling, of the British Wind Energy Association, said: “We need strategic leadership from the highest levels . . . We are only going to do this if the Government is brave enough to tackle these problems head on.” He called for the formation of a Cabinet-level sub-committee to lead the industry’s development.

A recently approved gas-fired station in Pembroke will be the largest in Britain, producing 2,000 megawatts, two thirds of the total produced by all of the country’s wind turbines.

Xabier Viteri, chief of Iberdrola Renewables, whose Spanish parent owns ScottishPower, blamed the economic crisis for the move but added that problems in Britain could force his company to consider investing elsewhere.

The latest announcement will come as an embarrassment to Ed Miliband, the Energy Secretary, who this week described opposition to wind farms as “socially unacceptable . . . like not wearing your seatbelt or driving past a zebra crossing”.

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