Funding energy projects

Funding and incentives

Local authorities identify project funding as the biggest barrier to installing sustainable energy technologies. Funding can come in a variety of forms for different types of projects. Some funding covers the whole project, while other grants cover specific phases (from feasibility through to capital expenditure).

The recent trend in Government support has been away from capital grants (e.g. the former Low Carbon Buildings programme) towards loans for capital (e.g. Salix or prudential borrowing) and payments for energy generation (e.g. feed-in tariffs and renewable heat incentive).

The document below gives a list of currently available grants, loans and incentives for each of the renewable technologies covered in this resource. You will also find links to websites for more information about the funding.

Grants, loans and financial incentives for sustainable energy projects (PDF, 3 pages, 36KB)

The Local Government Association (LGA) manages an EU funding tracker that is regularly updated with new funding opportunities. You will need to log-in to the site to access this information.

EU funding tracker - on the LGA website

The feed-in tariffs

The tariffs provides microgenerators (up to 5MW) with a guaranteed income for 20 or 25 years for the energy they generate and feed into the electricity grid. You can claim the ‘generation tariff' regardless of whether you use the energy that the technology generates. You can only claim the ‘export tariff' if you are connected to the national grid and feed some or all of the electricity generated in the grid.

The aim of this incentive is to make the technologies commercially viable. It has allowed some local authorities to become sustainable energy generators and it has resulted in new types of planning application for local planning authorities to handle.

On 7 February 2011 the Secretary of State for Department for Energy and Climate Change (DECC), Chris Huhne MP, announced the start of the first review of the feed-in tariffs. More information is available on DECC's website:

First review of feed-in tariffs

More information on the feed-in tariffs scheme

The renewable heat incentive (RHI)

The renewable heat incentive (RHI) will be launched in June 2011 and is the main funding stream for renewable heat generation. It has superseded the Low Carbon Buildings Program which is now closed to new applicants. Anyone who has installed a renewable heat producing system after 15th July 2009 will be able to claim RHI from June 2011. As there is no upper limit to the size of the heat equipment eligible under the RHI, schemes may range from individual dwelling or business to community sized district heating facilities.

More information about the renewable heat incentive is available on DECC's website:

Renewable heat incentive (RHI)

Local authorities as project developers

Each local authority and project will require a slightly different approach for project development. For an energy strategy the planning department is well placed with support from others, such as waste, housing, education or sustainability. For specific energy projects, the lead might come from the chief executive, finance, planning, sustainability or an elected member with support from all other departments.

'Community energy: planning, development and delivery' guide explains 10 stages to delivering a sustainable energy project. The process could be the same for all project developers and broadly the same for all technologies.

Community energy: planning, development and delivery - on the CHPA website


8 January 2015

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