Britain’s renewable energy industry last night accused the government of presiding over a farce after a scramble for heavily rationed grants for solar panels and wind turbines led to one month’s allocation being snapped up in little more than an hour.

As Tony Blair prepares to commit Britain to a binding target of generating 20% of its electricity from renewables by 2020 at next week’s European summit, companies installing green technologies said the government’s words were not being matched by actions. The accusation came after the Department of Trade and Industry exhausted its £500,000 allocation under the low carbon buildings programme by 10.15am yesterday - just 75 minutes after inviting applications.

Strong public demand for grants forced the DTI to apportion the £12.5m it has allocated for households in monthly segments rather than see the entire budget snapped up in one tranche. In December, the money ran out 20 days into the month; in January it was used up by the 12th and last month the DTI’s coffers had ran dry by noon.

The Solar Trade Association said: “Yet again, the Labour government’s commitment to climate change has been horribly exposed by the massive underfunding of its renewable energy grant scheme.

“Just a few months after the launch of the Stern report and wonderful words and international leadership on energy issues, the government is happy to let a monthly farce continue whereby homeowners can only obtain renewable energy grants during a monthly four-hour window on the first day of each month. This farce is taking place because the government is not prepared to back its rhetoric with properly funded programmes on energy.”

Although David Miliband, the environment secretary, said yesterday that Labour would cut red tape to allow householders easier access to carbon-free energy, the lack of money for household schemes is embarrassing for the government.

More bad news followed as figures released yesterday showed that more than three-quarters of all applications for new onshore wind farms have been turned down by national and local planing bodies, in spite of the government’s commitment to renewable energy.

The British Wind Energy Association (BWEA) said 12 out of 18 proposals had failed to win planning consent. This will make it difficult for the UK to meet its current target of generating 10% of electricity from renewables by 2010 - not to mention the ambitious target of 20% that Mr Blair has now decided Britain must reach.

The DTI had been resisting German efforts - along with France and several central European states - to persuade every EU member to commit to the new 20% target in time for next week’s summit. But Mr Blair, after meeting the German chancellor, Angela Merkel, last month, decided to intervene and reverse Britain’s position.

Commenting on the solar panel grants farce, a DTI spokesman said the government was aware that the system was not perfect and was keeping it under review. He added that the low carbon buildings programme was designed to stimulate public interest in renewable energy and that it was not possible to give a grant to everybody.

Howard Johns, who employs 15 staff at Southern Solar, said the rationing was seriously damaging his firm because those not lucky enough to secure funding under the government scheme were delaying having the work done until they were successful. “Our customers are keen to get grants to meet some of the cost of installation,” he said. “But of the 20 of our potential customers applying for a grant today, only one was successful. We can’t run a business with that level of uncertainty.”