Closure of LCBP - response

Further to the news that the LCBP programme has closed Tristan Haynes, MEA's Technical Adviser makes the folowing response:

The closure of the LCBP grants programme for renewable heat installations on Monday this week may well seem like a blow to the emerging renewable heat technology installation industry and certainly could be in the immediate term. However, whilst journalists and lobbying organisations are making much capital over the announcement it is not necessarily what it seems at face value!

Firstly the LCBP programme was always due to close long before the Renewable Heat Incentive (RHI) programme came in anyway; although it is true that £3 million previously allocated to it has been taken away as part of the £6 billion spending cuts being implemented by the new coalition Government.

Secondly those receiving a grant for an installation may not have been eligible for RHI payments if they had accepted the grant anyway (or at least would have to pay the grant back) due to various issues over the potential for ‘double counting' of CO2 savings at Government level and recipients being in potential receipt of funding exceeding ‘state aid' limits.

Finally the introduction of Feed-In Tariffs (FIT's) in April and the forthcoming RHI programme were always intended to replace up-front grants and in the long term will be worth far more than any grant ever was. It is, however, unclear as to how initial capital will be made available to those wishing to install such technologies (which poses a problem to community organisations in particular). Conventional bank loans could be used (although would likely have a NET cost), Government-backed low/zero interest loans may become available for the public sector in particular and utilities providers or even the Government itself may back their own ‘pay as you save' or hire purchase schemes. There is certainly much potential in general for third parties to offer upfront capital and/or maintenance of the installations in return for taking some/all of the returns; this is especially of interest for those developing potential ‘community share offer' projects.

The closure of this grant scheme may prompt speculation that the RHI itself may be under threat. However, this is unlikely as the inclusion for its provision in the Energy Act 2008 had strong cross-party support and consultation on the detail of the actual scheme has just finished with clarification on the Government response expected before December (when it will have to actually be implemented through secondary legislation). It is worth noting also that, like the FIT's, this scheme will actually cost the Government very little as it will be largely paid for by users of conventional heating fuels paying a surcharge on their bills (much in the same way that the current Climate Change Levy on commercial users of heating fuel works)

See for an opinion supporting this from the leading UK renewable energy industry lobbying organisation, the Renewable Energy Association.