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Last Updated: Friday, 14 October 2005, 09:39 GMT 10:39 UK
DTI 'damaging' green power sector
By Richard Black
Environment Correspondent, BBC News website

Solar panel installers on roof.  Image: Dulas ltd
You can't just turn companies on and off like a light bulb
Philip Wolfe, Renewable Power Association
Problems with a government grant programme are damaging the UK's renewable power industry.

That is the claim made by a number of companies and trade bodies working with solar, biomass and wind energy.

Two schemes providing financial support for small green energy schemes are ending this year, and the replacement programmes have yet to materialise.

The government says it is developing a coherent plan for small-scale renewable energy projects.

"This will have a very negative impact," said Philip Wolfe, chief executive of the Renewable Power Association, a trade group representing more than 400 firms.

"This is the Department for Trade and Industry (DTI), so they ought to understand how companies work; you can't just turn them on and off like a light bulb," he told the BBC News website.

The Clear Skies and Major Photovoltaics (PV) Demonstration programmes will authorise their final grants before the end of the year.

Since 2002, they have disbursed about 43m (US$75m) in grants towards small-scale solar PV projects, solar hot-water systems, micro-wind installations, wood stoves and ground-based heat-pumps, either at the level of individual households or small communities.

Typically they fund 10-50% of a project's cost.

New money

Clear Skies and PV Demonstration are due to be replaced by a Low Carbon Buildings (LCB) programme; but this will not be in place before April at the earliest, and will not issue its first grants until the middle of next year.

This will create a hiatus of at least seven months in which no grants can be obtained.

Renewable energy: Small is beautiful

"The industry is very dependent on a regional and local skilled installer base," said John Blower, of Filsol Solar in south Wales, who chairs the Solar Trade Association, the trade body for solar hot-water installers.

"And what's given some confidence to local installers has been the growth in the individual home-owner sector, where grants from government have been a sweetener to householders to invest in their own systems."

The DTI's consultation document on LCB acknowledges that a skilled installation sector is the key issue if more households are to switch from traditional fossil-fuel technologies to small scale renewables.

"It is vital to ensure that an adequate skills base is developed... to be capable of installing and maintaining the various micro-generation technologies," it says.

Yet industry bodies contend that the gap between the funding programmes will do the opposite, and reduce the skills base.

Graph showing rapid growth in solar PV over last decade.
"That bread and butter work is going to disappear for months at least, which is going to drive some companies out of the market; they'll revert to fitting oil or gas boilers," observed John Blower.

"Even another six months would prevent the problems we're talking about," said Philip Wolfe, "but there's been no response at all."

The DTI, though, played down the idea of a funding gap, pointing out that grants awarded this year will be paid out in the early part of next year.

In a statement, it also said that LCB is about developing "...a whole strategy that will create a sustainable market for the future," rather than just capital grants.

Old and new

The DTI is trying to direct funds away from retro-fitting old houses, seeking to concentrate instead on newly built developments where the government believes it can get a greater return for its money.

"These larger projects will also aim to engage the construction sector in developing projects that utilise micro-renewable technologies and demonstrate their merits," says the DTI's consultation document.

"It's a great mistake to concentrate on new build," commented Matthew Spencer, chief executive of Regen SW, the renewable energy agency for the south-west of England.

"You can do that through planning requirements at no cost to taxpayer," he told the BBC News website.

"It's much harder to develop a market in existing buildings, where uptake of these systems is driven by the need to replace boilers; you can't use planning regulations here, so you need a financial carrot."

Emerging technology

The last decade has seen a sharp increase in the uptake of some technologies, especially solar PV, with the price falling by around 7% per year.

But solar still produces less than 1% of Britain's electricity, at a time when greenhouse gas emissions are rising to such an extent that for the first time since Labour came to power, the country is in danger of missing its Kyoto Protocol target.

In the 2003 Energy White Paper, the government expressed support for micro-renewable power, and expressed the importance of bringing the public on board.

Wind turbine in Scotland against setting Sun.  Image: David Cheskin/PA
Is the Sun setting on options other than wind?
But as it pursues its immediate target of generating 10% of Britain's electricity from renewable sources by 2010, there is concern that it is neglecting everything but large-scale wind farms.

"Clear Skies was being over-subscribed to such an extent that really good schemes were being turned down," said Matthew Spencer, "when these are the renewables that people are most able to engage with and access.

"The public have shown every sign that they're ready; but unless the government puts significant money into Low Carbon Buildings, they will find it very hard to refute the allegation that they're obsessed with wind."

So far the government has not declared how big the LCB pot will be, and industry insiders believe there is pressure inside the DTI to keep costs small.

There is also scepticism that the DTI will be able to meet its target date of April - scepticism fuelled by a parliamentary answer given in March by the then Energy Minister Mike O'Brien, who said that LCB "...is expected to begin operating in financial year 2006-07."

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