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Government funding for developing renewable energy technologies

Government funding for developing renewable energy technologies has delivered technology innovation and increased the supply of renewable energy, according to a report published today by the National Audit Office. However, co-ordination has historically been limited and the absence of a consistent approach to measuring and reporting on the impact of this support means the overall value for money of spending to date cannot be demonstrated.

Numerous schemes offering direct support for renewable energy technologies have been launched during the last decade by various government departments and delivery bodies. Reflecting their own objectives and remits, each organization has determined its approach and spending on renewable energy technologies. Co-ordination among delivery bodies has historically been limited and there has been no routine collection of information on the spending and delivery by these schemes and their contribution to meeting the 2020 target for renewable energy and the longer-term statutory commitment to reduce carbon emissions.

The National Audit Office found that government-funded direct support for renewable energy technology had totalled £265 million between 2000 and 2009. This funding is separate from support provided through fiscal and regulatory measures, including the Renewables Obligation, which in 2008-09 provided financial support worth around £1 billion.

The available evidence suggests direct support has contributed to an increase in renewable energy generation. For example, the Department’s Offshore Wind Capital Grants Scheme contributed to an increase in renewable electricity equivalent to 14 per cent of total renewable generating capacity in 2008. Industry has had to seek funding from many short-term schemes to support long-term projects, but there is evidence that funding has successfully supported innovation.

Since taking on responsibility for renewable energy policy in October 2008, the Department of Energy and Climate Change has delivered a renewable energy strategy and it is now developing a supporting delivery plan. This provides an opportunity to improve co-ordination, consistency and the value for money achieved from Government funding for developing renewable energy technologies.

"The Department needs a more strategic approach to delivering government funding for renewable energy technologies. This requires clearer plans, better information, improved co-ordination and a more consistent approach to assessing results. At present the 2020 target looks optimistic.  The Department should complete work on developing its renewable energy plans as a matter of urgency, and agree responsibilities with delivery bodies for implementing the plan."

Amyas Morse, head of the National Audit Office

Notes for Editors

  • The Department of Energy and Climate Change is responsible for implementing the government’s renewable energy policy and targets. The UK is at risk of failing to meet the previous Government’s target to obtain 10 per cent of electricity from renewable sources by 2010: the latest available data from 2008 shows that only 5.5 per cent was obtained from renewable sources. Achieving the legally-binding EU target to have 15 per cent of all energy from renewable sources by 2020 will require a seven-fold increase from 2008 levels. The Climate Change Act 2008 further committed the government to delivering 80 per cent reduction in carbon emissions by 2050, but there is no specific renewable energy target beyond 2020.
  • The Government uses public funds to support renewable energy technology innovation and deployment. This direct support is additional to regulatory and fiscal measures of financial support funded by industry and consumers, such as the Renewables Obligation which provides renewable electricity generators with additional income and in 2008-09 provided financial support worth around £1 billion.
  • Between 2000 and March 2009, some 20 financial support schemes and funding streams provided direct support totalling £265 million for developing renewable energy technologies. This excludes funding for research, which was outside the scope of the report.
  • Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  • The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

PN: 29/10