Scotland's Heat Network Fund: application guidance

Eligible projects

Projects eligible for support

New low or zero direct emissions district heat network projects

District heat networks are defined as a network by which thermal energy is distributed from one of more sources of production to more than one building. For example, a new district heat network would comprise of a new zero direct emission heat source of generation (including utilisation of waste heat) alongside new primary and secondary heat distribution infrastructure.  

New zero direct emissions communal heating systems 

A communal heating system is a system by which thermal energy is distributed from one or more sources of production to one building comprising of more than one building unit, for example a block of flats. A new communal heating system would comprise of a new zero direct emission heat source alongside new primary and secondary heat distribution infrastructure.

Expansion of existing heat networks

There are heat networks across Scotland which have scope for expansion. SHNF will support the growth of these networks, but the expansion must align with the core objective to reduce carbon emissions.  

To receive funding for expansion, the equivalent of the heat demand of the new connections must be supplied from a ZDEH source as a minimum and use of the ZDEH source should be prioritised. Post-commissioning, the grant recipient will be required to submit an annual declaration and supporting evidence to show ongoing compliance with these requirements.

For expansion projects, the lead applicant and grant recipient should be the organisation which owns the existing heat network, not the organisation connecting to the heat network. Evidence will be required to show this. 

Expansion proposals must demonstrate:  

• the heat demand of new heat connections and that the capacity of the additional ZDEH generation will be sufficient to meet this heat demand 
• that control strategies will result in prioritisation of heat provision from the ZDEH source with modelling of use provided to evidence this 
• plans to fully decarbonise the rest of the heat network 

In addition, SHNF can also provide funding for the expansion of existing zero direct emission heat networks where further infrastructure is required to enable further connections.

Existing networks switching to zero direct emissions heat source 

The SHNF can also offer grant funding to support existing fossil fuelled heat networks to switch to zero direct emissions heat sources.  

Where the fossil fuel heat sources are being retained, applications must demonstrate to what extent the network will be decarbonised and provide assurance that the network will be managed in a way that minimises the use of fossil fuel sources.  

Applications must also demonstrate the future strategy to fully decarbonise the heat network which will be monitored as part of SHNF annual monitoring post-commissioning.  

We may request that a decarbonisation route map is submitted with timescales for decarbonisation. 

Decarbonisation proposals must demonstrate:  

• the extent of which the heat network will be decarbonised 
• if the heat network will not be fully decarbonised, plans to decarbonise the remaining heat provision  

Grant funding for measures required to improve an existing heat network infrastructure with the aim of switching to a zero direct emissions heat source may also be considered as eligible costs under Scotland’s Heat Network Fund. Funding is not available for general maintenance costs or efficiency upgrades.

Projects not eligible for support

The SHNF cannot support: 

• projects or technologies at research and development stage or any research and development activities 
• established generation technologies in Scotland such as onshore wind, large scale biomass, or conventional gas fired CHP supported technologies 
• direct emissions heating systems used for back-up or peak demand (although funding for back-up zero direct emissions systems, such as electric boilers, can be provided) 
• developing technologies at technology readiness level 1 to 6 (see description below)

Biomass projects

The SHNF will not fund biomass projects that: 

• do not adhere to existing regulations (including air quality standards) 
• use fuel made up of virgin construction grade logs or timber 
• use fuel not included in either the Biomass Sustainability List (BSL), the Sustainable Fuel Register (SFL) or any future government approved scheme 

Biomass projects must confirm annually that these criteria continue to be met. This will be monitored annually post-commissioning.