Budget 2009: Darling gives renewables a £5bn shot in the arm

Wednesday, April 22, 2009

The renewable power industry has been given a shot in the arm after Alistair Darling's budget announced over £5bn worth of new funding to hasten an offshore wind revolution and kick-start solar.

But there are concerns that oil and even nuclear were being given help and the British Wind Energy Association (BWEA) warned that other important obstacles, such as electrical grid connections and planning delays, remained for wind schemes.

Around £525m is to be pumped into the sector between 2011 and 2014 through the government temporarily raising subsidies for offshore wind projects from a current Renewables Obligation Certificates (ROC) banding level of 1.5 to 2.0.

A further £405m is promised "to support the development of a world leading low-carbon energy and green manufacturing sector in the UK" - something that should specifically benefit wind and tidal power.

And £4bn of new capital is to be injected by the European Investment Bank, which is owned by European Union member states but raises its money on the public capital markets. This will help green schemes overcome a serious lack of project money available from commercial banks which have become risk averse due to the credit crunch, said industry experts.

"They have given us what we asked for so it must give this a thumbs up," said BWEA spokesman, Charles Anglin. "But we are still faced with a £10bn to £15bn cost of an offshore grid, a cost that needs to be accepted as a social cost and spread across all users including coal and nuclear. There is also the need for changes in the planning system which remain unaddressed," he added.

Derry Newman, the chief executive of photovoltaic installer Solar Century, said an additional £45m for the Low Carbon Buildings Programme should end the current suspension of solar grant applications and enable the sector to plan with confidence for the launch of the feed-in tariff in April 2010.

"The Treasury is to be congratulated for recognising the important contribution that technologies such as solar PV can make to delivering a low-carbon Britain. We look forward to working with the Department for Energy to ensure that the current hiatus in solar PV support is lifted urgently," he argued.

John Sauven, the executive director of Greenpeace, said the European bank money and the various government initiatives should begin to unlock some of the 8GW of wind power that has secured planning permission but has not yet been built. "E.ON and its partners should now give an immediate green light to the proposed London array, which if built will be the largest offshore wind farm in Europe," he added.

The government also pledged £750m strategic investment fund for backing business with £250m steered towards low-carbon business opportunities and innovation.

"This will include initiatives on low-carbon vehicles, as well as the nuclear and renewable energy industries," it said in a formal statement which raised questions from environmental consultant, David Lowry, about whether this was a small but significant breach of its promise not to give any kind of subsidies to the atomic power sector.

Doug Parr, the chief scientist at Greenpeace, said: "Nuclear has had 50 years to get its act together. It should not need more money and this is cash that could and should have all all gone to renewables."

The government also frustrated green activists but delighted the oil industry by giving tax breaks to smaller North Sea fields with the aim of bringing 2m extra barrels of crude into production.

This story was featured on The Guardian Website.

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