Renewable energy firms hit by solar subsidies freeze

Government accused of undermining its own environment strategy as money sits idle in low carbon buildings programme budget

Terry Macalister
guardian.co.uk, Thursday 12 March 2009

Renewable energy companies have accused the government of undermining its own "green" industrial strategy by ending subsidies for solar energy under the low carbon buildings programme (LCBP).
The Renewable Energy Association (REA) said it was "astonishing" and worrying that solar grants had been frozen since 26 February although there was still money in the building programme's budget.
"This latest disaster in the low carbon buildings programme is completely at odds with the green new deal we hear so much about," said Philip Wolfe, the director general of the REA.
"We are talking about relatively small sums to support UK manufacturing, technological innovation and local jobs. This is an industry with a very bright future and a key contributor to the low-carbon future we are aiming for," he added.
Last December an extra £7m was allocated to fund solar projects under the LCBP to tide it over until the programme closed but this cash was used up by the end of last month.
The REA claims a further £12m-£15m still remains in the wider programme budget and predicts that £8m of that will remain unspent by the end of the programme at the current rate of take-up. The Department of Energy and Climate Change (DECC) has said the programme will not be extended and any funds left over will be sent back to the Treasury, according to Wolfe.
The government department, which only days ago launched a new green industrial strategy with great ministerial fanfare, denied last night that any definite decision had been made about the cash that was still available inside the LCBP budget.
"We recognise that the popularity of the low carbon buildings programme has led to an over-subscription in solar PV applications," said a spokesperson. "We are discussing with industry what options are open to us to address this. From 1 April people who install small-scale energy equipment like solar panels or wind turbines will be able to claim double the financial support through the renewables obligation and from April next year we will introduce a new system of guaranteed cash payments."
The REA said it had warned the DECC of the funding gap in early February.
"The end of the LCBP will leave many REA members in limbo with no funding as the recession bites. It is imperative that the tariffs are implemented as soon as possible and that the renewable electricity and heat tariffs are introduced together by 2010 at the latest. Otherwise the industry is looking at a serious funding gap and contraction as some firms are unable to stay afloat," it added.