Austerity for renewables - those cuts in full

Every single non-ringfenced government department has been asked to make significant savings – including the Department of Energy & Climate Change, who manage significant amounts of funding for the development of renewable energy. DECC have recently announced cuts to this funding. We’ll go through those cuts and discuss their implications.

• £6.1 million efficiency savings and under-spending on programme budgets within DECC.

It’s good to see that DECC’s first target was itself – inasmuch as it’s found significant savings from its own internal management., These savings mean that significantly less needs to be cut from funds going out to projects across the UK

• £4.7 million saved by cancelling the final funding rounds of the Bio-Energy Capital Grants Scheme and the Bio-Energy Infrastructure Scheme. These schemes have been responsible for nearly £60 million of public investment since 2002, and have supported around 400 individual projects. £5.3 million of grants for 2010/11 are not affected and will remain in place, closing as planned on 31 March 2011.

These are well-established schemes intended to provide support for the growers and transporters of biofuels, as well as industries and services looking to install their own bio-fuel generation. Biofuels have become controversial in recent years, but still represent an important method of reducing net CO2 emissions. Small-scale bio-fuel generation plants will be eligible for the Feed-In Tariff, which means that attracting private finance for these plants should be significantly easier than when the fund was set up.

• The department will save £1 million on funding for development of Deep Geothermal energy generation, which will still receive £1 million this year.

Although the potential of geothermal generation within the UK is still not clear, and the current state of the technology means that it won’t be able to supply enough in time to overcome the energy in the middle of this decade, this is still a cause for concern. This funding was for four boreholes across the country – two in Cornwall and two in County Durham. These projects were intended to demonstrate the potential of particular sites for geothermal energy development – analogous to putting up a wind speed mast before building a wind farm. If the projects mentioned above do not have sufficient finance to proceed, it’s unlikely that they’ll be able to attract private capital. However, the Country Durham project is supported by the Council, who may yet step in.

• Saving £3 million by reducing the scope of the Offshore Wind Capital Grants Scheme.

The previous £8 million allocated for capital grants to offshore wind grants has been reduced to £5 million – although it’s not yet clear which projects have missed out as a result. While any slow-down in building new offshore wind farms is a concern, the amount of capital investment required to complete the entire 33GW of offshore turbines identified in the Crown Estate’s third round of development is estimated to be up to £120 billion, meaning £3 million by comparison is a drop in the water – if you’ll pardon the pun. There may yet be scope for the Government to provide incentives to attract private investment in offshore wind via the proposed Green Investment Bank – most likely by offering to underwrite loans from major sources of finance such as pension funds.

Edit: It's possible that the DECC press release was in fact referring to a different fund, but mistakenly put down this scheme - which should be finished already - instead. We're clarifying this.

• Early closing of the Energy Saving Trust technology trials, saving £700 thousand from the £3 million pound programme.

These trials cover a wide range of technologies, including micro wind turbines, ground source heat pumps and electric cars, to name a few. It’s clear that many new green tech programmes will miss out on seed funding as a consequence of this programme closing – but this should be seen in the context of a rapidly expanding market for green technology.

• The Carbon Trust will receive a £12.6 million reduction to this year’s grant for low carbon technology and business support funding from DECC.

The Carbon Trust supports new green businesses & innovations, so this reduction may mean a pause in the development of the green economy – but it’s likely that the Carbon Trust will be folded into the proposed Green Investment Bank when it’s implemented, so any cuts should be seen in this context.

While the above are of course disappointing from the perspective of anyone who wants to see the UK take a lead in innovative new renewables technologies, with all the economic and environmental benefits they bring, none of the projects being cut represent an absolute obstacle to the development of the technologies they concern, with the possible exception of geothermal.

In the current political climate, cuts in government programmes are inevitable. Any campaign to oppose them must identify which funding is absolutely necessary to progress that cause, and renewables are no exception. That’s why we’ll be launching a campaign to support keeping the funding for the development of sites such as ports for the manufacture of offshore wind turbines which is a key component to delivering the thousands of jobs we expect to be created in our wind industry – and we’ll be asking for your help! Watch this space!