UK green companies facing cash crisis

Poll reveals frustration at government rhetoric on green new deal as firms struggle without loans or investment

Terry Macalister
guardian.co.uk, Monday 6 April 2009 13.36 BST

More than three quarters of Britain's green energy companies are facing major financial difficulties in gaining access to loans and investment money, according to a survey by the renewable energy industry body.
Out of 39 member firms that responded to a poll by the Renewable Energy Association (REA), 32 said they were suffering from a shortage of cashflow and other problems.
The findings come just days after BP announced that it was cutting 620 of the 2,200 jobs inside its solar operation as a result of global over-production and just after G20 ministers failed to come up with any real financial push on green issues.
Philip Wolfe, director general of the REA, said the survey highlighted the need for immediate action by ministers. "Given all the rhetoric on 'Green New Deal' and 'Green Tech' it is astonishing that so far the renewables industry has received no dedicated support – even in areas that don't cost extra money," he said.
Bioenergy, one of the firms who responded to the REA's survey, said it relied in the past on 20 suppliers to provide it with the biodiesel it sells on to road hauliers, but is now down to two or three as the others had gone out of business.
"This time last year we were positively talking to our bank about borrowing money to buy some refining plant that was being sold off. But by November and December, when we needed an overdraft for a few thousand pounds, they were not interested," said Brian White, a director of the Milton Keynes-based green fuel company.
MGT Power said it was finding it hard to find banks willing to lend £250m so the firm can build a 300MW woodchip power station in Teesside. "It's not about the attractiveness of projects. People in renewables normally encounter trouble because they're pushing difficult projects, but there are just literally no funds available," said the firm's director Chris Moore.
He was confident he would be able to raise cash from hedge funds if the banks remained reluctant, but that higher interest payments would push up overall costs.
Aeolus Power, an installer of small-scale wind turbines on houses, has seen just one piece of domestic business over the last four months and is now throwing all its sales efforts into the public sector, targeting schools and hospitals. A mixture of cash-strapped homeowners and uncertainty over public funding in funds such as the Low Carbon Building Programme has left the company vulnerable.
"It is unclear what the future holds," says Christine Griffith, a director of Bristol-based Aeolus. "With this government it seems to be one step forward and three steps back when we should be moving swiftly forward [to beat climate change]," she adds.
Barry Johnson, managing director of Solar Twin, is equally infuriated about what he sees as a lack of consistency from ministers which has seen grants for the kind of panels he provides dry up. "Retail has fallen off a cliff but fortunately there has been a growth in social housing and schools. Unless there is a rise in the price of (carbon) fuels the outlook for renewables is bleak," says Johnson.
Tom Chance, who works for the BioRegional charity that works on sustainability and carbon-reduction schemes, says his customers are suffering from the complexity of accessing different government grants. This is delaying schemes such as the One Planet Sutton project to refurbish 3,000 buildings in south London and the Eco Innovation Park in the East Midlands.
Most of the respondents to the REA survey wished to remain anonymous but their general comments suggest an industry in severe trouble. "We have seen a 50% reduction in trade, resulting in redundancies," says one, while another reports "we are all feeling very uneasy" and another says "we are just surviving from day to day".
Wolfe said: "As so little has been done so far, the last opportunity comes in this month's budget. Other countries have already committed huge stimulus monies to their renewables industries while we have nothing, so the UK industry is now at a serious competitive disadvantage."