6 Dec 2006

Renewable Energy Subsidies

The Low Carbon Buildings Programme (LCBP) has been running since April this year. It’s a DTI funded grant scheme to encourage people to fit renewable energy technologies into their homes. It replaced an earlier scheme called the Blue Skies Grant.

It’s been heavily oversubscribed. It was anticipated that the funding for the scheme would be £3million over three years but this figure has already been surpassed and they have had to raise monies from other kitties to keep it going. Renewables are fashionable, as never before.

This table is drawn from the LCBP website. It shows just how the money is being distributed. It is interesting because it shows which technologies are the most popular (the No of Projects) and which are attracting the most money (Money Committed). They are not one and the same.

Quite why PV cells should be so heavily subsidised is a good question. In terms of bang per buck, they are easily the most expensive of the options. They account for just 11% of grant-aided installations and yet account for 55% of the grant money. Even with these large grants, they are still a hell of a long way from having a sensible payback.

I have ignored the UK outside England. This is because both Scotland and Northern Ireland have separate— and more generous — schemes that are available for some technologies but not all of them, so their inclusion would tend to skew the figures.


Low Carbon Buildings programme for all UK

Action Renewables for grants in Northern Ireland

• Scotland has a grant programme called the Scottish Community and Householder Renewables Initiative (SCHRI). They like snappy names in Scotland. It handles grants for everything except solar PV. They don’t appear to have a website, or at least I can’t find it, but there is a very helpful lassie on 0800 138 8858.

• VAT position on renewables: On new builds, solar panels are zero-rated, as are the great bulk of fixtures and fittings. If fitting solar panels onto an existing house, the VAT rate is 5%.

• Subsidies: the government pays a subsidy to all generators of renewable electricity, whether grid connected or not. This is known as the Renewables Obligation Certificate or ROC. The value is driven by market forces but is currently around 4.5p per kWh or unit of electricity, equivalent to £45 for a megawatt hour.


  1. Have you done an EU and forgotten about Wales ?

  2. I am tempted to ask "Where?" but I wouldn't be so rude. If you interogate the LCBP database, you can select Wales as an option and find out how differently the grants have been applied there. But it's the existence of alternative grants in the other territories that skew the national UK figures, so it seemed like a good idea just to use England, the largst territory, to get a picture of what is happening with this centrally funded grant programme.