The Refit programme, which was announced in May 2006, has been delayed due to the government's insistence on informing the the commission about it under state aid rules, even though the German government introduced a similar, more generous system without seeking EU approval.

According to the chairman of the Irish Wind Energy Association (IWEA), Tim Cowhig, the delay has created considerable uncertainty in the renewable sector, particularly as the government awarded Refit support to 55 projects in September of last year even though it remains unclear whether or not the programme will secure EU approval.

"We get a warm feeling from the government, the regulator and Eirgrid but they haven't put the jigsaw together, " he said. "Because state aid clearance hasn't come through, our members can't get financial support from the government even though it has been announced.

"It's a chestnut we've been fighting with them over. It's bureaucracy gone mad, you have countries like Germany who have similar schemes who have decided that their schemes are not state aid but in Ireland, we have and we're paying for that."

Cowhig also said the Refit price levels, which were originally set in 2004, were also too low to encourage new projects, particularly as large wind farms were only guaranteed 5.7c per kilowatt/hour (kWh), compared with modern gas plants which typically receive 9c per kWh for the electricity they produce. In Germany, wind farms receive up to 8.7c per kWh.

However, a spokesman for the department of energy said the government felt compelled to submit the programme for EU approval, particularly as "a failure to notify a state aid could result in a later instruction to recover the state aid and interest from each recipient of that aid. This would undermine the confidence of investors."

He said that while the Refit programme was similar in some respects to the German programme, it involved compensating renewable energy producers using a public service obligation fund (PSO), which meant it was different in the eyes of the EU to the German scheme.

"The EU Commission had previously ruled that payments from the PSO fund were a transfer of state resources which brought the support programme within EU state aids rules, " he said.

He added that the German scheme was based on a law that was referred to the European Court of Justice in 1998 and decided on in 2001. But he said that the government expected the Refit scheme would be approved as early as next month.

The spokesman also deputed Cowhig's comments that the delay was undermining investor confidence.

"The projects we have approved will be coming on stream in another two to three years and essentially Refit has made it easier to secure financing for these projects starting off due to the certainty produced by guaranteed pricing, " he said.