What renewable energy funding is available in Scotland?
Scotland is committed to ending reliance on direct emission heating systems that produce greenhouse gas emissions to address climate change and ultimately reach net zero by 2040.
The government has made various funding options available, including grants and loans, for clean heating and energy efficiency improvements in domestic and non-domestic properties.
Homeowners in Scotland can access up to £16,500 in support to install a ground source heat pump in an eligible home.
Homeowners can apply for grant funding of up to £7,500 for energy efficiency improvements (up to 75% of the combined cost) through a Home Energy Scotland grant or loan.
A rural uplift is also available to support rural and island homes, taking the total grant amount up to £9,000.
Another £7,500 may be accessed through an optional interest-free loan (there is an administration fee of 1.5% of the total loan, a maximum of £150).
N.B.
This scheme is not available for landlords, business or property developers, or heat network connections.
Work cannot start on the installations until you’ve received the funding offer in writing.
Homeowners can also get funding from the Scottish Government’s Warmer Homes Scotland scheme to improve home energy efficiency, like new heating or insulation.
The improvements offered will depend on a survey of the home. Assessors will come to your home to survey it and will recommend improvements suitable for the home, which could include a range of insulation and heating.
Derry Young built a stunning five-bedroom property in the remote Scottish Highlands.
Longcrook was off the gas grid, so Derry was looking for renewable heating options, having rejected oil as too environmentally unfriendly.It features a Kensa ground source heat pump with solar thermal to provide 100% of the property’s heating and hot water needs.
Mr & Mrs Hart decided to install a ground source heat pump in their 19th-century property to displace the costs of their oil boiler system and provide a sustainable renewable heating system.
Despite being an older, listed property, it was straightforward to swap to the ground source heat pump without having to upgrade any radiators.
In October 2021, the Scottish Government published a heat in buildings strategy, outlining a commitment to invest £1.8 billion in capital funding over the next five years for energy efficiency and zero carbon heating in Scotland’s buildings.
Scotland’s Public Sector Heat Deacrbonisation Fund will eventually replace the existing Scottish Energy Efficiency Loan Scheme, which has been running since 2006 and offers zero-interest loans for energy efficiency improvement projects.
The application portal closed on Tuesday 5 December 2023, however, applications can be submitted to the fund at any time. This is a rolling fund and will remain open for applications until all funds have been distributed. Applications are reviewed quarterly.
As per the criteria for the previous scheme, only public sector bodies with borrowing powers can apply to Scotland’s Public Sector Heat Decarbonisation Fund. Applicants are required to provide 20% match funding for projects.
Heat pump funding for local authorities
Scottish Central Government Energy Efficiency Grant Scheme (SCGEEGS)
Funding available through the Scottish Central Government Energy Efficiency Grant Scheme enables the delivery of heat decarbonisation and energy efficiency projects. This fund is for public bodies who have no access to borrowing powers. It runs from 2021-2026 and delivers around £30m annually for public sector buildings.
Eligible public bodies who can apply are:
Scottish Government directorates
Executive non-departmental public bodies of the Scottish Government
Executive agencies of the Scottish Government
Non-ministerial offices of the Scottish Government
Scottish health bodies
Further education colleges
Public corporations are not eligible
Buildings currently under PPI/PFI contracts are not eligible
Scottish Green Public Sector Estate Decarbonisation Scheme
The £20 million Scottish Green Public Sector Heat Decarbonisation Fund is accelerating the decarbonisation of public-sector properties such as leisure centres, schools, and university campuses across Scotland.
The funding, to support the ambition to reach net zero by 2045, is the first time direct grant awards have been made to public sector bodies in Scotland instead of loans.
The application portal closed on Tuesday 5 December 2023.
Scotland is leading the way in heat decarbonisation by introducing its New Build Heat Standard (NBHS), which banned the installation of fossil fuel boilers in new homes from 1st April 2024. All newly built Scottish homes will need to use alternatives like heat pumps or heat networks.
There is a transition period, meaning that any building warrants issues before 1st April 2024 remain valid for three years and may still install gas boilers. However, with 20,000 new homes built in Scotland each year, this will soon start a green heating revolution.
Where the NBHS applies
The NBHS applies to all new buildings and some conversions where a building warrant is applied for from 1 April 2024.
The Standard only applies to systems used for heating and cooling and does not apply to industrial process heat.
If you are converting an existing building, the NBHS will apply if:
you have a direct emissions heating system in the building or area of the building you are converting, and
it is ‘reasonably practicable’ to install a clean heating system – guidance on what is considered ‘reasonably practicable’ is provided in support of the new standard 6.11 within Section 6 (energy) of the 2024 Technical Handbooks.
Exceptions to the NBHS
The NBHS does not apply:
if you are altering or extending a building built under a warrant applied for before 1 April 2024
to an emergency heating system
to heating provided solely for the purpose of frost protection
Scotland’s Heat Network Fund (SHNF) is a £300 million grant scheme that will run until 2026. It supports the development and rollout of heat networks across Scotland. This fund will stimulate investment and grow the low-carbon heat sector while reducing greenhouse gas emissions.
The criteria for funding are:
Public and private sector for shovel-ready projects that can demonstrate a funding gap. Grants will be based on this funding gap, up to 50% of the total eligible capital costs.
Projects must be of sufficient scale to be suitable for the SHNF, which will be decided on a case-by-case basis.
Projects must meet the definition of a heat network as per the definitions provided in Heat Networks (Scotland) Act 2021
Kensa ensured that 14 new homes created by Lar Housing Trust in the Fountainbridge area of central Edinburgh have a reliable, renewable heat source.The housing charity commissioned Kensa Contracting to install ground source heat pumps connected to a shared ground array of boreholes.Heat Network funding was secured from the Scottish Government.
Grampian Housing Association undertook a project to convert the school building on Abergeldie Road – which dates back to 1877 – into 10 homes, plus renovate the derelict schoolhouses to form two further homes, as well as a new build house in the schoolyard. In addition, two new properties were built on the site, housing three and eight flats, respectively.
Heat pump funding for Scottish private landlords
Private Rented Sector Landlord Loan
Registered private landlords in Scotland can apply for up to 2 renewable systems* per property, worth up to £17,500 per property in total through the Private Rented Sector Landlord Loan (the heat pump loan amount is £10,000).
Who is eligible?
Individual or sole trader
Property needs to be listed on Scottish Landlord Register
Must not be used as a second home or holiday let
Must be registered to pay domestic Council Tax
Must be occupied or a tenant in place within 30 days of the loan being paid
NB *other renewable systems include solar PV, solar water heating systems, energy storage, wind or hydro turbines, biomass, and connections to renewably powered district heating schemes.
No interest is payable on 5 properties of less. Six or more is charged at 3.5% APR
