Concern Over Drop in Renewable Energy Grants

The Renewable Energy Association has expressed concerns over the Department of Trade and Industry's reduction of support for homeowners investing in renewable electricity, despite getting extra cash in last month's budget.

The Chancellor increased funding by 50% to almost £19m, but DTI now intends to cut the maximum grant offered to householders from £15,000 to £2,500.

Part of a re-launched Low Carbon Buildings Programme, the move will increase the cost to the customer by over 60% of an average solar photovoltaic (PV) system and is expected to undermine growth in the PV, micro-wind and small hydro sectors.

Philip Wolfe, Chief Executive of REA, said:
"While it is good news that the programme will be back up and running, this scale-back makes a nonsense of the extra funds from the Chancellor and of the Government's ambition to bring on-site power to the people. We hope that renewable heating from biomass, solar thermal and heat pumps can now get back on track, but this decision will place renewable electricity beyond the reach of all but the wealthiest households.

"This will particularly hit PV and wind, which have been two of the most popular elements of the programme. Demand has collapsed following DTI's decision to suspend the programme in March, and with the unnecessary funding cuts it is unlikely to recover.

"Only last month, the Chancellor responded to the early success of the programme with the decision to increase funds to £19m, so that it could carry on for another 15 months. With just £3m spent to date, the real risk is not that funds will run out, but that millions will be left in the bank while household carbon emissions continue to rise.

"Our members can't comprehend why DTI responds to a 50% funding increase by reducing grant levels and limiting the programme to half its original duration. Less than two months ago, the UK committed to a European target to achieve 20% of our energy from renewable sources by 2020. Instead, this decision gives the impression that DTI is out of step with the Government's visionary low carbon policy agenda."