The UK government has announced that as of 06.00 am this morning (May 24) the Low Carbon Buildings Programme (LCBP), which has supplied grants for microgeneration technologies such as solar photovoltaics, for households, community organisations, schools, the public sector and businesses in the UK since 2006, is closed.
The new coalition government pledged this morning to make £6bn worth of departmental spending cuts in 2010/2011; £85m of which will come from the Department of Energy and Climate Change (DECC).
About half of the £85m will come from efficiencies and other savings across the DECC’s central spending and that of its arm’s length bodies. The DECC says that it has ‘”focused on making efficiencies in our back office functions first but some efficiencies in our programmes of work are also possible.” These cuts will amount to approximately £42 million.
The other half comes from cutting or slowing down planned expenditure. This will amount to approximately £43 million, and this is where the axing of the LCBP comes in. From 06.00 am today, no new applications will be accepted.
In order to gain the full £3m of savings taken from the LCBP the DECC has had to close the program immediately. This may seem odd considering the fact that the news has been full of positivity from the new government, claiming that there will be an emphasis on renewable energy and a passion for a low carbon economy.
However, the DECC argues that the LCBP has been successful in the past at driving the adoption of renewable and microgeneration technology, including solar PV, providing approximately 20,000 grants for the capital and installation costs of microgeneration equipment. These have produced lifetime carbon savings of 300,000 tonnes of CO2. Yet now there is a new incentive available – the feed-in tariff. This means that the solar photovoltaic sector will not be hit hard by the LCBP closure, however it will affect the renewable heat market.
The DECC anticipated that support for the proposed Renewable Heat Incentive for heat under LCBP would continue up until its proposed introduction in April 2011, “Since demand for grants has been unprecedented and we had very little unallocated funding remaining. It has been decided that by closing the programme now, these unallocated funds will contribute towards DECC’s overall savings,” the DECC claims.
Applications worth £63 million for payment in 2010-11 are not affected by the cuts and where grant offer letters have been issued they will be processed to provide continuity and continuing market development (investment, innovation and jobs).Applications that were received before the programme closed and which are currently considered by the programme contractor, BRE, will also not be effected by the closure. If they pass the standard due diligence test applied to all applications they will be honoured.
Breakdown of DECC savings:
- £6.1 million efficiency savings and under-spending on programme budgets within DECC;
- £4.7 million saved by cancelling the final funding rounds of the Bio-Energy Capital Grants Scheme and the Bio-Energy Infrastructure Scheme. DECC claims these schemes have been responsible for nearly £60 million of public investment since 2002 and have supported around 400 individual projects. The Department adds that £5.3 million of grants for 2010/11 are not affected and will remain in place, closing as planned on March 31 2011;
- £1 million on funding for development of Deep Geothermal energy generation, which DECC claims will still receive £1 million this year;
- £3 million by reducing the scope of the Offshore Wind Capital Grants Scheme;
- £700,000 from early closing of the Energy Saving Trust technology trials;
- £2.9 million by reducing the scope of the Central Government Low Carbon Technology Programme saving;
- £12.6 million reduction to the Carbon Trust's grant for low carbon technology and business support funding from DECC.
For more information on the LCBP closure, visit the LCBP website.