REA warns solar incentive scheme has run out of cash… again

The UK's solar energy industry is facing another funding void after it emerged that the main funding scheme for supporting installation of photovoltaic (PV) solar panels by businesses has run out of money for the second time this year.

According to the Renewable Energy Association (REA), funds for solar PV projects under phase two of the government's Low Carbon Building Programme (LCBP) have "run dry", leaving the industry facing a major funding gap between now and next March when the Clean Energy Cashback feed-in tariff scheme is to come into effect.

The LCBP initially ran out of funds earlier this year, prompting the government to provide about £50m in additional funding to keep the scheme running as part of the Budget. However, the section of the fund earmarked for PV projects has run out of cash for a second time, and according to the REA it has been told that it will not be topped up again.

"The government has consistently underestimated the demand for solar PV through the scheme," said Ray Noble, PV advisor at the REA. "They have repeatedly had to allocate a larger chunk of the fund to PV and about £24.5m has been awarded. But now they have run out of money."

The news comes at a difficult time for the UK's solar PV industry, which is lobbying for the government to increase the proposed level of tariffs on offer through its Clean Energy Cashback scheme. A final decision on the tariffs had been expected last week but it has now been put back to January, leaving many projects in limbo.

"This development puts the onsite renewables industry in a very difficult position," said Noble. "It is absolutely right that DECC and the Treasury re-examine the tariff proposals, which are too low. However, the PV industry now urgently needs bridging funds and clarity on the tariff proposals. It's another fine mess for the UK PV industry."

He added that it was now highly unlikely that any new solar PV projects would be authorised until a final decision is made on the tariffs, leaving businesses stalled for about two months.

A spokesman for the Department of Energy and Climate Change said: A spokesman for the Department for Energy and Climate Change said: "It's very encouraging that there's been an unprecedented demand for this technology but we have to be fair to all renewable technologies. We've put £18 million into the solar PV " pot" since April which is more than the industry asked us for so it's really an unprecedented demand."

He added that grants for householders are still available under the Phase-1 scheme including support for PV and that the feed in tariff would come in next April and provide future incentive for solar PV projects.