Government plans to make Britain a global leader in green energy are set to be rescued by the European taxpayer.

The Times has learnt that the European Investment Bank (EIB) is in talks with developers about a financial rescue package for the £3 billion London Array scheme, which is located in the Thames Estuary. Planned to be the world’s largest offshore wind farm, it is a project that has strong personal backing from the Prime Minister.

Gordon Brown wants part of the renewable energy scheme finished before the 2012 Olympics.

The UK desperately needs London Array to fulfil its ambitious target of generating 35 per cent of electricity from renewable sources by 2020.

Pleas for cash to the EIB, the long-term lending bank of the European Union, are a last-ditch attempt to save the project, which has suffered from a number of high-profile companies pulling out and fears over its funding.

The developers have limited the amount they are prepared to fund and, as a result of the credit crunch, banks are reluctant to lend on such large projects.

Even the entry of the EIB may not safeguard the future of the plan to build up to 341 giant offshore windmills generating sufficient electricity to power 750,000 homes.

A spokeswoman for the EIB declined to comment on specific projects but confirmed: “We are committed to funding offshore wind projects in the UK and are currently in discussions with a number of project promoters.”

The London Array project has been struggling since last May when Shell, the oil company, withdrew its support, citing spiralling costs.

Its two other backers, E.ON, the German power group, and Dong Energy, a Danish company, have pressed ahead. Last October it was announced that Masdar, a $15 billion (£10 billion) renewable energy fund controlled by the Government of Abu Dhabi, was acquiring Shell’s former stake.

The EIB, founded in 1958, has helped to finance many of Europe’s big postwar infrastructure projects. One of its core aims is to support sustainable development and it has recently committed to investing at least €800 million (£720 million) a year in renewable energy.

The bank has already funded a string of solar energy projects in Spain and France, as well as Greater Gabbard, another UK offshore wind project, to be built off the Suffolk coast.

The involvement of the EIB, with a capital base of €232 billion, will be welcomed by the UK Government and by the renewable energy industry, which is still reeling from the impact of the credit crunch and the collapse in the price of oil and carbon emissions.

While the EIB is not permitted to lend more than half the total cost of the project, its provisional offer of funding, which could still be withdrawn, is thought to run into several hundred million euros.

A final decision on London Array, which was first mooted in 2001, is expected this summer.

Paul Golby, the chief executive of E.ON UK, told The Times that the plunging value of the pound had also undermined the economics of the London Array project by forcing up the price of imported turbine equipment by more than 20 per cent.

A string of companies have cut their investments in the sector in recent months, including Shell and BP.

Iberdrola Renovables, the Spanish company that is the world’s largest wind farm developer, announced recently that it was slashing its investment programme in renewable energy from €3.8 billion in 2008 to €2 billion in 2009.

Green power

35%-40% the amount of electricity generation the UK is committed to supplying from renewable energy by 2020

1% the level of electricity supplied by the UK’s wind turbines in 2007

£100bn Estimated cost of building renewable energy schemes necessary to meet 2020 targets

53% Fall in global investment in clean energy between March 2008 and the same month this year

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive