The sources of funding
Opportunities for funding clean heat projects
ALPHA
Sources of finance
Regardless of the ownership and operation model, a clean heat project will often require finance beyond that in local authority reserves or available from Public Works Loan Board borrowing. There are a range of sources of finance a local authority can explore.
Public sector funding schemes
There are a range of publicly available sources of financing for clean heat projects. These funding sources are typically available to public, private and public-private projects.
Boiler Upgrade Scheme
Amount: £2,000 to £7,500 available for individual households.
Technology: Air source heat pumps, air-to-air heat pumps, ground source heat pumps and shared ground loops up to a capacity of 300kwth.
Nation(s): England and Wales
Home Energy Scotland Grant
Amount: £7,500 (excl. rural uplift) or £9,000 for heat network connections available for individual households.
Technology: Air source heat pumps, ground source heat pumps and domestic connections to a heat network.
Nation(s): Scotland
Heat Network Delivery Unit
Amount: Variable, up to 50% of project costs
Technology: Construction and commercial costs of heat networks or shared ground loops.
Nation(s): England and Wales
Scotland's Heat Network Fund
Amount: Variable, up to 50% of project costs
Technology: Construction and commercial costs of heat networks or shared ground loops.
Nation(s): Scotland
Heat Network Delivery Unit
Amount: Up to 100% of the estimated eligible external costs of heat network development studies, with a cap of £100,000 per application
Technology: Techno-economic feasibility and project development for heat networks at pre-capital stage.
Nation(s): England and Wales
Heat Network Support Unit
Amount: Up to 100% of a detailed feasibility study up to a value not exceeding £50,000, up to 50% match funding for outline business cases up to a value not exceeding £75,000, and commercialisation costs
Technology: For heat networks at the pre-capital stage.
Nation(s): Scotland
Heat Network Efficiency Scheme
Amount: Up to 100% of eligible project costs for revenue grants (to commission optimisation study) or up to 50% of project costs for capital grants (to deliver improvements).
Technology: For existing heat networks or communal systems with poor baseline performance metrics.
Nation(s): England and Wales
Public sector funding schemes
When working with the private sector to deliver a project there may be an opportunity to access private investors, such as pension funds. These investors may invest more generally in a private delivery business or in a project directly. These investment arrangements would be developed on a project by project or partnership by partnership basis.
National Wealth Fund (NWF)
Typical investment range: Typically £5m to £500m+
Primary focus: Large-scale infrastructure, clean energy, and industrial strategy sectors.
Nation(s): UK-wide
Scottish National Investment Bank (SNIB)
Typical investment range: £1m to £50m (debt or equity)
Primary focus: Transition to Net Zero, place-based equality, and scaling up innovative Scottish businesses.
Nation(s): Scotland
Development Bank of Wales
Typical investment range: From micro loans of £1,000 to debt and equity financing reaching £10m.
Primary focus: Supporting SMEs, technology start-ups, property development, and green business loans.
Nation(s): Wales
Private Finance
When working with the private sector to deliver a project there may be an opportunity to access private investors, such as pension funds. These investors may invest more generally in a private delivery business or in a project directly. These investment arrangements would be developed on a project by project or partnership by partnership basis.
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