Renewable energy industry gets £45m gap funding

Yesterday's Budget included £45m to restart the Low Carbon Building Programme, the government's main on-site renewable energy initiative, which recently expired.

Through the Renewable Energy Association (REA), industry had lobbied for a far higher figure – £230m – to tide it over before feed-in tariffs, which support renewable installations by paying above-market rates for renewable power, kick in from 2010 at the earliest.

Stuart Pocock, head of on-site renewables at the REA, said: “The government has listened, but it won't be enough to get industry in a fit state to deliver on the tariffs.”

Meanwhile, the government has opened up a £4bn line of credit from the European Investment Bank for renewable energy projects, which was “warmly welcomed” by the British Wind Energy Association (BWEA).

John Piggot, associate director at Arup, said the line of credit could be “very significant,” adding: “Shortage of good-value credit is a major problem for renewable projects at the moment, which is frustrating because the other economic factors make good sense.”

The government also upped the renewables obligation certificates (ROCs) banding for offshore wind farms from 1.5 to 2.0, awarding more certificates to the development of the technology. Government hopes this will encourage £525m more support for orders in 2009/10. This figure will fall to 1.75 in 2010/2011.

A spokesman for the BWEA said: “There's 9Gb of wind energy projects in the pipeline, compared with 3.5Gb installed. We hope this will encourage more projects to be completed.”

Additionally, an extension was announced to the climate change levy exemption for combined heat and power (CHP) plants beyond 2013. This could help deliver between £2.5bn and £7.5bn of investment in new CHP plants, according to Graham Meeks, director of the Combined Heat and Power Association.

The government also said that £25m would be made available for at least 10 community heating schemes, though detail on this was lacking.