New spending caps threaten renewable industry

Spending caps announced by the Government could push more investors away from renewable energy projects, according to a leading firm of accountants.

The UK renewables sector is currently looking particularly fragile in the wake of the Feed-in Tariff (FITs) cuts to large-scale solar photovoltaic PV.

According to financial giants Grant Thornton new caps, announced yesterday (July 6), in the Control Framework for the Department of Energy and Climate Change (DECC) levy-funded spending could cripple other renewable industries in the same way.

DECC’s levy funded spending, covering initiatives like Renewable Obligation Certificates (ROCs) and Warm Home Discounts could, according to the accountants, lead to ‘further decline in investor confidence’ for the renewables sector.

Grant Thornton’s head of energy, environment and sustainability, Nathan Goode, said: “The accounting tail appears to be wagging the policy dog.

“Moreover, DECC has responded to the new Treasury policy by considering capping by technology on renewable projects qualifying for subsidy.

“Setting separate caps in this way will inevitably cause tension between renewable technologies and will also raise the risk for investors that caps will be exceeded and they will lose their subsidy.

“DECC claims the caps are designed to be consistent with meeting the EU carbon reduction commitments, however even if the overall cap is sufficient the question remains whether each of the caps for individual technologies is high enough.”

Mr Goode went to say firms should engage now with Government or an industry association.

As well as begin lobbying for a high cap for technologies relevant to their business and ensure that subsidies are ‘grandfathered’.

Mr Goode’s comments refer to page 4 of the Control Framework for DECC levy-funded spending (DECC 6 June 2011), more information on DECC funding can be found here.

Luke Walsh

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