Funding gap looms as government cans renewables grants

Satisfaction across the renewable energy industry with the announcement last week of new feed in tariffs for homes and businesses installing renewable energy technologies was tempered somewhat after the government suspended its existing grant scheme for on-site renewables.

In a surprise move the Department of Energy and Climate Change circulated an announcement last Wednesday confirming that phase one and two of the Low Carbon Building Programme (LCBP) grant scheme was closed to new applicants with immediate effect.

The £131m LCBP has been the main government scheme for subsidising on-site renewables installations, providing grants to homeowners, public sector organisations and businesses installing renewable energy systems such as wind turbines and solar panels.

Its surprise closure will leave renewable energy firms having to operate without any incentive scheme in place for new projects until the high profile Clean Energy Cashback feed in tariff scheme comes into effect in April.

DECC said the money saved by cancelling the LCBP would help to support recently announced plans to introduce a new renewable heat incentive scheme.

"The total funding for LCBP is finite and the closure to applications for electrical microgeneration technologies will allow the remaining un-allocated funding to be focussed on thermal microgeneration in the run-up to the introduction of the Renewable Heat Incentives (RHI’s) scheduled for April 2011, " the announcement said.

However, trade group the Renewable Energy Association (REA) expressed frustration at the decision, arguing that renewable energy firms should have been given more notice that the scheme would be effectively scrapped.

"The speed of the announcement means many homeowners will not have been able to submit their applications in time and may potentially be left out of pocket after submitting planning applications," said Stuart Pocock, head of on-site renewables at the REA.

The group added that the move would also increase pressure on the government to effectively promote the introduction of feed-in tariffs and the Renewable Heat Incentive in order to ensure the public are aware of the new incentives on offer.

The move brings to an end an LCBP scheme, which has been a repeated source of controversy and has been held up by environmental groups as evidence of the government's failure to prioritise renewable energy technologies.

The scheme has been accused of favouring a small number of firms and has repeatedly run out of cash leaving homeowners and businesses unable to access grants for which they are eligible.