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LONDON (Reuters) - The government should provide more financial support to businesses, local authorities and schools to help them install renewable energy such as solar arrays and wind turbines, a parliamentary committee said on Tuesday.
The government currently supports small-scale renewable projects through its Feed-In Tariff (FiT) scheme. Large projects over 50 megawatts such as offshore wind are supported through so-called contracts-for-difference (CfD).
The Energy and Climate Change Committee, which scrutinises the policies, expenditure and administration of the Department of Energy and Climate Change, said in a report that medium-sized renewables projects between 10 and 50 MW are slipping through the net - too big to receive FiTs and too small for CfDs.
Such projects could help diversify energy supply, help businesses reduce their energy costs and contribute towards Britain's goal of cutting greenhouse gas emissions by at least 80 percent from 1990 levels by 2050.
"Local heating schemes in particular could be helpful in balancing out peaks and troughs in electricity supply and demand by storing energy as hot water when there is a surplus of electricity being generated," said Alan Whitehead, a member of the committee.
Local energy projects currently have difficulty in securing funding and connecting to the grid. Obtaining planning permission can also be expensive and time-consuming.
The committee said a "comprehensive package of measures" was needed to address planning, grid access, support mechanisms and finance.
Britain's Green Investment Bank could provide funding for project development, feasibility studies and grid permits to reduce some of the risk in getting projects through the planning process, it added.
The committee report cited recent incentives for shale gas exploration as a possible precedent.
Over the past two months, the government has unveiled what it described as the world's most generous incentives for shale gas investment and remuneration for local communities near exploratory wells.
Shale gas is not a renewable source of energy, but the government is hoping it will cut dependence on costly foreign natural gas imports.
"It is notable that the new Office of Unconventional Gas and Oil is examining community benefits from shale gas as a priority, and perhaps such an approach could be adopted for medium-scale energy projects," the report said.
Reporting by Nina Chestney; editing by Jane Baird