The ENDS report has a (registration-only) article about the rate at which the LCBP funding is being used up. Initially, £6.5 million was provided to fund household microgeneration from 2006/7 to 2008/9. However it’s only part way through the first year and already £3.5 million has been allocated. Without any additional funding on the horizon, the REA and others are worried that the currently booming microgeneration market will dry-up until more grants are available. Much in the same way that things slowed down between the end of the Major Demonstration Programme and the LCBP last April.
The response from government has been a bit mixed. On the one hand, there’s the conservation DTI line: “We are monitoring the rate at which this money is being paid out and are currently reviewing the amount that is available for individual applicants.” In other words, the budget for the programme is not likely to increase (whether that’s the decision of DTI or the Treasury is a bit of a mystery) and instead people will simply be offered less money, helping the pot go longer.
On the other hand though, Defra is saying that industry should offer more innovative forms of finance for microgen: says the minister, “it should be as easy to get finance for a wind turbine as it is for a sofa.” This makes sense: B&Q’s started to sell microgeneration technologies in its stores and surely it’s only a matter of time until you start seeing “0% financing for the first year” offers popping up.
There are two questions here. First, can DTI and Defra prod industry to develop these offers before the grant funding gets throttled back? If the transition can be managed well, it could be excellent opportunity to establish microgeneration technologies on their own, gradually removing the crutch of grant support. The second issue is whether the shift in funding will alter the types of technologies installed. According to the EST figures, 59% of the applications to date have been for solar hot water and 28% for solar photovoltaics or microwind. If the grants shrink, it seems likely that the number of PV installations will fall in favour of cheaper technologies like solar thermal. The PV industry therefore has the most to lose and they should be taking the lead on working with government to ensure that new private finance options are available to consumers when the grants dry up.
