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Loans and Revenue Support - Not Grants

Government support for renewables has made a transition from grants to loans and revenue support. Whereas previously the main mechanism of support from the Government was through the provision of grants, the emphasis has now changed to support electricity generation projects through a Feed-In Tariff (FIT) or Renewables Obligation Certificates (ROCs), and a similar Renewable Heat Incentive (RHI) is also planned for introduction in late summer 2011. These incentives enhance the financial value of the actual energy generated by a project to make it more attractive for private sector investment.

Installations which have received any public funding or "State Aid" towards the capital costs of purchasing and installing the equipment are generally not eligible for the FIT unless the grants are paid back. This restriction applies to any grants given from public funds for this installation of the equipment in question, it makes no difference if the organisation which received the grant is different to the organisation which wants to claim the FIT. For example, if an installation is sold by an organisation A to a third party B, that third party B will be unable to claim the FIT until all the state aid (e.g. grant funding) which was given to A for the installation of the equipment has been paid back. Under the Renewable Heat Incentive, the rules are stricter - you cannot receive a grant which contributes to the direct costs of an installation and then receive the Renewable Heat Incentive - paying back the grant would not change this.

Operation of the FITs and the RHI is a matter reserved to the UK Government. Therefore policy on this is led by the Department for Energy and Climate Change (DECC) and administration is handled by Ofgem, which has published a guide to the FIT. Any queries should be directed to DECC, Ofgem or your energy supplier.