Since May of last year, when Shell pulled out, the London Array offshore windfarm project as been in jeopardy.

It would be the world's biggest offshore wind farm if both phases of the 1,000 megawatt (MW) site, 12 miles off the south-east coast, are built. But until yesterday even the 630MW first phase looked a dream - for the uninitiated, 1,000 MW equals one gigawatt (GW).

However, with much celebration, the German, Danish and Abu Dhabi-backed consortium has finally given the go ahead for work to start on the giant project. Many people will object to the forest of 260ft towers, each with three 171ft blades, springing up out of the sea, but many more such sites are envisaged in order to meet our increasingly stringent environmental targets for power.

So what's changed and are the conditions for the London Array's £1.97bn investment programme sustainable so we can keep building enough mega-wind farms to meet the Government's targets and keep the lights on?

The Budget helped by increasing the amount of financial aid the energy market delivers to offshore wind power through the Renewable Obligation Certificate. Basically, household energy supply companies will now get more bang for their buck when trying to meet their renewable obligations by buying electricity generated through offshore wind. They have a financial reason to go shop from the London Array owners.

But while this helps the demand side of the equation, the supply side has been bolstered, quite possibly only in the short term, by a fall in the price of inputs such as steel and aluminium on world markets. The consortium has also been clever in redesigning how they build the giant turbines to further reduce costs. It now takes only 14 hours to erect one rather than several days, reducing the cost of the construction vessels needed, for instance. An easing of the credit crunch in general may also have persuaded companies such as E.ON that they can afford to invest again on this scale.

But eye-catching announcements like yesterday's will make zero difference in alleviating the grave threat we face to our security of energy supply.

At the moment we generate 75GW of power in the UK of which wind accounts for about 2.2GW. The Government wants us to generate 33GW from wind by 2020. The London Array's phase one will generate 630MW (about two-thirds of a gigawatt) which comes on stream only in 2012. You can see the enormous investment still needed, and needed very soon, if wind power is going to hit its target.

But by 2016, 35pc of our traditional oil and coal-fired power stations will be closed under the Large Combustion Plant Directive. What's going to replace that capacity? Wind is highly unlikely given the current rate of new build. New nuclear stations won't appear until 2017, even under the most optimistic assumptions, and clean coal technology will only have demonstration sites by 2014.

Gas appears the obvious solution but the economics of new investment are being radically altered by so much in subsidies going to other energy technologies, while our storage and import facilities are too small. There are gas pipelines to Europe but no guarantees, under current market arrangements, that the gas will flow from the Continent to us when we need it most in the coldest winters.

As 2016 approaches, unless we're simply going to trust to luck, it seems inevitable a future government will have to cut back on some of our environmental targets, upsetting the green lobby no end. But at least this will buy us sufficient time to build enough green generating capacity to guarantee us a real carbon-free future and keep the lights on at the same time.

Cautious optimism until the US recovers

Measures to stimulate the economy are showing signs of working. A raft of manufacturing and industrial output news has left the City hopeful that the official estimate of a 1.9pc contraction in the first quarter is too pessimistic and will have to be revised.

Chief among the measures have been the Bank of England's reduction in interest rates to 0.5pc and its relatively new quantitative easing programme. Alistair Darling's fiscal boosts have been puny, largely because the public coffers are empty, and the tax rises he has managed are short on revenue but long on spite.

Perhaps the biggest contribution he has made to a brightening outlook is the part he's played in undermining sterling. With this year's official borrowing requirement of £175bn and total net debt soaring to 79pc of gross domestic product, sterling investors have taken fright. A low pound will help exporters when overseas markets recover - a narrowing of the trade gap in March was down to falling imports, rather than rising exports. But before we get too carried away we should consider just what's happening overseas, particularly in the US. Yesterday unemployment estimates there worsened while house prices fell a record amount in the first quarter.

We risk being premature with our optimism until signs of US recovery are far more established.