Ministers urged to extend grants for solar panels as demand soars

Ministers who imposed a cap on the number of homes that qualify for grants for "green" energy sources such as solar panels and wind turbines following a sharp rise in consumer demand have come under pressure to scrap the monthly limit.

The cap on grants was imposed last December as ministers became alarmed by the rising cost, pushed up by the willingness of home owners to spend money to reduce global warming.

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When the Cabinet discussed its strategy on global warming this week, Trade Secretary, Alistair Darling, told ministers that if his department had not imposed a "cap" on grants, the entire budget for the scheme would be used up long before it was due to close.

It has created a monthly rush as homeowners go online first thing in the morning on the first day of each month, hoping to be at the front of the queue. This month, one application came in every 24 seconds, until the whole month's budget had been swallowed, in just over an hour.

Householders who still want to replace roof tiles with solar panels have to decide whether to bear the whole cost themselves, which could be as a much as £7,000, or try again on 1 April.

Manufacturers complain that the crisis is undermining the Government's policy of stimulating a market for green energy sources, in the hope that rising demand will bring down prices.

"The cap is just a liability in the marketplace," Graham Meeks of the Renewable Energy Association said yesterday. "How can you run a business on a lottery? You still have to carry out sales and marketing but no matter how good a salesman you are or how good your product is, in the end you depend on the customer sitting in front of a computer and being quick off the mark to get a sale."

March's grants became available online at 9am on Thursday, and, by 10.15 am, the Department of Trade and Industry had accepted 189 applications and allocated £635,340 in grants. Bidding was then closed.

The winning bids included 79 homes that bid for solar water heating, 62 bids for photovoltaic solar panels in the roof, 31 for domestic wind turbines, 11 for ground source heat pumps, five for wood fuelled boiler systems, and one for a combined biomass stove and room heater with an automated wood pellet feed.

One frustrated applicant, John Grist of Hadleigh, near Ipswich, said: "I have personally complained to the DTI and made them aware that this is just a farcical situation. I urge anyone to make a similar complaint."

A DTI spokesman described the take-up as "fantastic". He added: "The scheme is a demonstration programme designed to kick-start the household microgeneration sector. It cannot support every application and the ultimate goal for the environment and taxpayer will be a market that can stand on its own two feet without subsidy."

The cap on the grants available each month was introduced on 1 December. Before that, the DTI was allocating about 450 grants a month, at a cost of over £1m a month. In December, it took almost two weeks for the monthly cap to be reached but in February, the whole allocation had been taken by noon on the first day.

The cost of alternative power

* PHOTOVOLTAIC SOLAR PANELS

Panels cost up to £9,000 per kilowatt installed. From April, the maximum grant will drop to £2,000 per kilowatt. Average grant: £7,341.

* WIND TURBINES

A typical household turbine has an output of 2.5-6 kilowatts. Performance varies wildly. A 6-kilowatt system can cost £18,000. Average grant: £4,111.

* SOLAR WATER HEATING

A panel in the roof can supply all the hot water you need in summer but you will have to turn on the boiler in winter. The cheapest is about £2,000. Average grant: £400.

* GROUND SOURCE HEAT PUMPS

The pumps transfer heat from the ground to warm the house or heat water. An 8-kilowatt system costs up to £9,600 plus connection costs. Average grant: £1,186.

* BIOMASS BOILERS

They generate heat from wood pellets and other biofuels. A 20-kilowatt boiler, adequate to heat a three-bedroom house, costs up to £5,000. Average grant: £1,500.

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