REA slams "embarrassing" end to microgen grant scheme

The Renewable Energy Association (REA) has labelled as "embarrassing" the government's phasing out of a grant scheme for public sector bodies investing in microgeneration technologies, accusing it of undermining the embryonic industry as it awaits the introduction of a new incentive scheme in the form of feed-in tariffs.

The Department of Energy and Climate Change issued a warning last week that public sector bodies such as schools, hospitals and universities had just a few months to apply for grants under the government's Low Carbon Buildings Programme (LCBP) before the scheme comes to a close in June.

A spokeswoman for the department said there was £24m still available for public sector bodies as the government seeks to bring the scheme to a close ahead of the introduction of a wider-reaching feed-in tariff (FIT), designed to offer users of microgeneration technologies the opportunity to sell power to the grid at premium rates.

However, Philip Wolfe, director general of the REA, said that while the LCBP had enjoyed only moderate levels of success, it should not be phased out until the new FIT is properly in place.

"The Low Carbon Buildings Programme needs to be revitalised, refinanced and extended until the launch of the new tariffs in 2010, instead of being allowed to dwindle to an embarrassing close," he said. "This is a golden opportunity to build much-needed UK capacity in the sector."

He added that the withdrawal of grants could result in a tough year for the microgeneration firms that hope to benefit when the FIT comes into effect.

"The government rightly talks about a green jobs revolution and an energy-generating democracy," he said. "But these initiatives will be strangled at birth, if the companies that would deliver them are left without a market in the meantime."

His comments were echoed by Nick Rau, renewable energy campaigner at Friends of the Earth, who also accused the government of creating a potentially dangerous funding gap for the embryonic onsite renewables industry.

"Ministers should be increasing their financial support for small-scale renewable energy schemes – not pulling the plug on its already inadequate funding," he said. "We're delighted that the government has promised to introduce a feed-in tariff next year, but there will be a huge gap in funding when grants to schools, universities and hospitals end in June."

However, others within the renewables industry are more sanguine about the end of a grant scheme that they have long regarded as offering an unfair advantage to a relatively small number of operators.

"The LCBP was atrociously structured from the word go and is hugely anti-competitive as only a few selected suppliers are eligible for projects that are awarded grants," observed one industry insider.

For example, while there are more than 25 companies operating in the UK that offer on site micro-wind turbine technologies, only three – Proven Energy, Iskra Wind and Wind Sure – are eligible for grants.

"Those manufacturers that are eligible will want to see the LCBP extended, but for the rest of the industry, it doesn't mean anything to them," said our source. "If it was to be extended it would have to be opened up."