Renewable energy grant scheme abruptly halted

The new Government's self-professed green credentials have come under question as a key grant scheme to put renewable heating into buildings has been stopped, to save a mere £3 million.

As of 6am on Monday, May 24th, the Government stopped taking fresh applications for grants for renewable heat systems. These were available under phase 2e of the Low Carbon Buildings Programme (LCBP).

The previous government’s intent was for the Renewable Heat Incentive (RHI) to take over from the LCBP. However there is now a gap of ten months before this goes live on April 1st 2011.

The LCPB's website says that "demand for grants has been unprecedented" and "we had very little unallocated funding remaining". It has therefore "been decided that by closing the programme now, these unallocated funds will contribute towards DECC’s overall savings".

The Solar Trade Association (STA) called it a "a retrogressive step" given "the relatively small budget required to support the LCBP".

DECC's cuts

The Department of Energy and Climate Change (DECC) said it had to make the cut to as its part of the £6bn cuts announced by George Osbourne and the Treasury. DECC is contributing £85m to this total.

About half this figure will come from efficiencies and other savings across our central spending and that of DECC's quangos. The other half comes from cutting or slowing down planned expenditure.

Effect on the industry

The declared "unprecedented demand" indicates a healthy sector and the public's desire to install microgeneration. Many social housing providers had significant plans to install renewable technologies such as heat pumps this year under the scheme.

These and other projects will now most likely be put on hold until the RHI comes in, although its exact form has yet to be confirmed.

Therefore the STA believes the ten month gap will cause a loss of jobs in the industry just at the moment the country wants to build capacity to install hundreds of thousands of renewable heating systems each year.

They called on the Government to find a small extra element in its budget to support the LCBP until the launch of the new incentive.

Howard Johns, Chairman of the STA said “This is very bad news for the solar industry, and a very disappointing move from the new coalition who are aiming to be the greenest Government ever. Once again been undermined for short term gain. At this point we have no idea what the RHI will look like and whether we will get it at all - effectively leaving our sector in limbo, and jobs at risk.”

Scott McLean, marketing director of Ownergy, commented: "The same happened to LCBP grants for renewable electricity installations ahead of the Feed-In Tariffs going live. We don't see it as any indication that the Renewable Heat Incentive is under threat."

The Low Carbon Buildings Programme

The LCBP grant programme has provided approximately 20,000 grants for the capital and installation costs of Microgeneration equipment of which, to date 11,000 have been for thermal technology (33% by value, 58% by number of installations). These have produced lifetime carbon savings of 300,000 tonnes of CO2.

Feed-In-Tariff for renewable electricity, introduced on 1 April 2010, mean that LCBP is no longer required for electrical microgeneration.