Infrastructure Investment Plan 2021-22 to 2025-26: programme pipeline update - March 2022

Sector: Energy

Programme name: Scotland's Heat Network Fund

Programme description: Provides capital support to accelerate the deployment of new zero emission heat networks as well as support the decarbonisation and extension of current heat networks. The Fund will stay open to applications for the foreseeable future, with quarterly updates to be provided detailing the budget committed so far.

Estimated total investment: £300 million.

How is programme being funded: Programme is capital funded by the Scottish Government.

Programme delivery timetable: 2021-22 to 2025-26.

Latest programme progress: Scotland's Heat Network Fund was launched in February 2022 to provide certainty to investors on the capital support available in Scotland to deploy heat networks. Expressions of Interest for the Fund have already been received with full applications expected over the next few months. The £1 million Heat in Buildings Development Funding Invitation was launched in March 2022 to support the production of Investment Grade Business Cases for projects which can then subsequently progress to be considered for capital support under Scotland's Heat Network Fund.

The Heat in Buildings Strategy published in October 2021 committed £400 million to large scale heat decarbonisation over the next 5 years. The £300 million Scotland's Heat Network Fund makes up part of this commitment.

Contribution to economic development: Capital investment from the Fund will help grow a strong heat network industry in Scotland and create high quality jobs. Applicants to the Fund must demonstrate their project's potential to have a positive and significant contribution on skills and supply chain in Scotland.

Contact for public enquiries: email: HeatNetworkFund@gov.scot

Programme name: Low Carbon Infrastructure Transition Programme (LCITP)

Programme description: Programme supports the acceleration of projects to develop investment grade business cases and the delivery of low carbon infrastructure projects.

Estimated total investment: Phase 1 (2015-2018) £76 million / Phase 2 (2018-2021) £60 million

How is programme being funded: Programme is capital funded by the Scottish Government with support for 40% activity through the European Structural Funds up until the Green Recovery: Low Carbon Energy Project Capital Fund invitation which was launched in September 2020 and fully funded by the Scottish Government.

Programme delivery timetable: 2015-16 to 2022-23

Latest programme progress: The LCITP will not have any further funding invitations with the programme now closed. There are still around 25 projects in the pipeline from previous LCITP funding invitations that are currently being constructed. The LCITP has supported the co-development of over 30 proof of concept and development proposals for low carbon projects. LCITP has run a number of open funding invitations including the Social Housing Net Zero Heat Fund, Green Recovery: Low Carbon Energy Project Development Funding, Scottish Low Carbon Heat Funding Invitation, Transformational Low Carbon Demonstrator Invitation and the Innovative Local Energy Systems Invitation.

Up to March 2022, LCITP has offered over £70 million of capital funding to 36 low carbon projects.

COVID-19 and Brexit impacted upon both the supply chain and delivery of projects and the delivery timetable has been extended.

Contribution to economic development: The LCITP has provided significant capital investment across various low carbon energy sectors in Scotland. Grants under the LCITP have been awarded on a competitive basis with the scoring criteria for applications requiring projects to demonstrate their potential to have a positive economic and social impact on Scotland.

Contact for public enquiries: email: LCITP@gov.scot

Programme name: Heating in Buildings (Formally Energy Efficient Scotland Domestic programmes)

Programme description: Investment in our domestic energy efficiency and zero emission heating systems supporting the elimination of poor energy efficiency as a driver of fuel poverty and reducing emissions from the housing stock.

Estimated total investment: £465 million.

How is programme being funded: Capital funded through the following routes:

• National fuel poverty scheme - currently Warmer Homes Scotland (WHS) which is delivered through a contract with Warmworks. A successor scheme is being procured to go live when the current contract expires. The successor will have a greater focus on decarbonisation and increased spend per intervention with an increased contract value
• Area Based Schemes (ABS) which are delivered through grant funding to local authorities

Programme delivery timetable: 2021-22 to 2025-26.

Latest programme progress: £55 million allocated to WHS and £64 million to ABS in 2022-23.

Contribution to economic development: Contributes to the development of the supply chain and skills base across all regions of Scotland including rural and island locations in order to support rapid acceleration in zero emissions heating system conversions and energy efficiency upgrades. Improves Scotland's housing stock by improving the property's energy efficiency and emissions ratings to the standard required to meet statutory targets. Provides benefits to the wider community through vocational training and employment opportunities. Aligns with Local Heat and Energy Efficiency Strategies and Delivery Plans in order to maximise benefits to local communities from the heat transition;

Contact for public enquiries: Home Energy Scotland acts as referrals administrator for national fuel poverty scheme and can be contacted through the Home Energy Scotland website / Heat in Buildings National Delivery email: ceu@gov.scot / Area Based Schemes Delivery Team email: SGareabasedschemes@gov.scot

Programme name: Social Housing Net Zero Heat Fund (Low Carbon Infrastructure Transition Programme)

Programme description: Fund to support social housing landlords across Scotland to take forward projects to deploy zero emissions heat, improve energy efficiency and reduce fuel poverty. This fund is for the retrofit or refurbishment of existing housing stock and is not for new build social housing.

Estimated total investment: £200 million.

How is programme being funded: Programme is being capital funded solely by the Scottish Government.

Programme delivery timetable: 2021-22 to 2025-26.

Latest programme progress: The fund has awarded almost £15.5 million to 19 social housing projects across Scotland. A further 9 projects were received at the February 2022 checkpoint and are currently going through the assessment process. The £500k Social Housing Net Zero Development Funding Invitation was launched in February 2022 to support the production of Investment Grade Business Cases for projects which can then subsequently progress to be considered for capital support under Social Housing Net Zero Heat Fund.

The Heat in Buildings Strategy increased the budget to £200 million to accelerate the deployment of energy efficiency measures and zero emission heating in order to achieve our 2045 climate ambitions.

Contribution to economic development: Applications for funding under the Social Housing Net Zero Heat fund must demonstrate the expected benefits that the project will deliver including economic benefits. Projects must also have a positive economic impact for tenants and demonstrate a reduction or no increase in energy bills.

Contact for public enquiries: email: netzerosocialhousing@gov.scot

Programme name: Green Public Sector Estate Decarbonisation Scheme

Programme description: Programme to support heat decarbonisation and energy efficiency across the public sector estate.

Estimated total investment: £200 million.

How is programme being funded: Programme is being funded solely by the Scottish Government in line with recent Programme for Government commitments.

Programme delivery timetable: 2021-22 to 2025-26 .

Latest programme progress: The Green Public Sector Estate Decarbonisation Scheme (GPSEDS) delivers an offer of support for public bodies across Scotland, building on the established success of the Public Sector Energy Efficiency Loan Scheme and the Non-Domestic Energy Efficiency Framework. In June 2021, the programme successfully launched its first round of Scottish Central Government Energy Efficiency Grant funding offering support to more than 40 projects across the public sector in Scotland, covering both resource and capital support.

The programme will launch further funding calls in the Spring of 2022 to support multi-year projects and to continue to boost heat decarbonisation and improve energy efficiency across Scotland's public sector.

The Heat in Buildings Strategy increased the budget to £200 million to accelerate decarbonisation and increased energy efficiency of existing public sector building in order to achieve our 2045 climate ambitions.

Contribution to economic development: The GPSEDS continues to provide significant capital investment across the public sector. Investing capital and resource funding in energy efficiency and heat decarbonisation projects in public sector organisations provides them with support to meet ambitious net-zero targets while freeing up their own resources to invest in services that benefit the people of Scotland.

Contact for public enquiries: email: GPSEDS@gov.scot

Programme name: Heat in Buildings Capital Investment

Programme description: Investment to support heat decarbonisation and energy efficiency in homes and buildings, community energy, decarbonising islands and energy.

Estimated total investment: £365 million.

How is programme being funded: Capital – grants and loans delivered via a number of delivery partners.

Programme delivery timetable: 2021-22 to 2025-26.

Latest programme progress: Funding issued as planned via CARES (Community and Renewable Energy Scheme), SME and domestic cashback schemes and District Heating Loan Fund. The Heat in Buildings Capital Investment fund includes residual funding after major funding programmes had been taken into account. Since September 2021, other funding programmes have had increased investment which, which resulted in a reduction.

Contribution to economic development: The SME (small and medium-sized enterprise) Loan and cashback scheme aims to support businesses based in Scotland by installing measures which will increase their energy efficiency and reduce their carbon output and energy costs while improving financial savings and business competitiveness. The is primarily accessible via the Business Energy Scotland (BES) advice and support service.

CARES provides advice and support, including funding support (grants and loans) to community groups and other eligible organisations seeking to explore their renewable energy options. The aim is to support the growth of community and local energy in Scotland and to ensure that communities across Scotland are engaging, participating and benefiting in the energy transition to net zero. Local and community energy projects have the potential to help local communities reduce carbon emissions, create local jobs, upskill local people, reduce energy costs and overall allow greater investment in local economies.

Contact for public enquiries: Advice and support is delivered on behalf of the Scottish Government at the Business Energy Scotland website / Loan and cashback support can be found at the Home Energy Scotland website / CARES is delivered on behalf of Scottish Government and further information can be found at the Local Energy Scotland website.

Programme name: Clyde Mission Heat Decarbonisation Fund

Programme description: Investment in zero emission heat projects along the River Clyde.

Estimated total investment: £25 million.

How is programme being funded: Programme is capital funded by the Scottish Government.

Programme delivery timetable: 2021-22 to 2025-26.

Latest programme progress: Work is underway to develop a scheme to distribute funds to support the delivery of zero emissions heat projects including heat networks, communal heating systems and single generation solutions for residential and commercial premises along the River Clyde which contribute to the aims of Clyde Mission. An announcement on the detail of that scheme is expected to be made summer/autumn 2022. Clyde Mission is Theme 3 of the £1 million Heat in Buildings Development Fund which was launched in March 2022 and will provide pre-capital support.

Contribution to economic development: Applicants will be asked to demonstrate their contribution to a just transition and projects must a positive and significant impact on skills and supply chain in Scotland.

Contact for public enquiries: email: clydemission@gov.scot

Programme name: Scottish Industrial Energy Transformation Fund (SIETF)

Programme description: SIETF is the Scottish administered version of IETF and supports manufacturers to fund the deployment of investment-ready energy efficiency technologies and/or decarbonisation at their industrial sites. The fund also supports feasibility and engineering studies into energy efficiency or deeper decarbonisation.

Estimated total investment: Up to £114 million depending on size of business that successfully apply for match funding and the sum of total project costs which will include industry contributions.

How is programme being funded: £34 million of SG capital committed in 2020 (as part of low-carbon funding).

Programme delivery timetable: 2021-22 to 2025-26 .

Latest programme progress: The first application window in early 2021 resulted in grant offers being awarded to 8 sites across Scotland. The second call for applications received submissions covering a mix of energy-intensive industrial sectors with 9 deployment and 5 study projects requesting funding of up to c£10 million (£230k relating to studies) with overall project costs in excess of £20 million. Assessment and due diligence on these projects are due to conclude in June 2022. 3rd competition window due to run over summer 2022.

Contribution to economic development: Investment to support energy efficiency or decarbonisation of energy-intensive industries (EII) can sustain high-value jobs that are often in the supply chains which are vital for regional communities, the Scottish manufacturing sector and economy as a whole. There are significant barriers however to attracting the necessary investment – particularly long payback periods – whilst sites must remain internationally competitive. Via match-funding, SIETF grants are incentivising investment across various sectors including food and drink, pharmaceuticals, glass-making and a data centre. This demonstrates the steps which government and industry are taking together to deliver against Scotland's climate change ambitions by co-investing to decarbonise the industrial sites that local jobs and communities depend upon.

Contact for public enquiries: email: SIETF@gov.scot

Programme name: Energy Transition Fund

Programme description: This package of investment will support our energy sector and help us make significant progress on energy transition, as we move toward a net zero society by 2045.

Estimated total investment: £75 million.

How is programme being funded: £75 million. The Energy Transition Fund (ETF) was launched in June 2020, and was increased from £62 million to £75 million in September 2021. The ETF will support our energy sector and the North East over the next 5 years, to make progress on energy transition as we move toward a net zero society by 2045.

Programme delivery timetable: 2020-21 to 2024-25.

Latest programme progress: The Energy Transition Fund has already announced the funding of the following:

• £26.3 million for an Energy Transition Zone - ETZ was officially opened in February 2022 and will transform north east Scotland into a globally integrated energy cluster focussed on accelerating net zero through energy transition activities. The core partners Opportunity North East (ONE), Scottish Enterprise (SE), Aberdeen City Council (ACC) and Aberdeen Harbour Board (AHB) will work collaboratively with their stakeholders across the UK to deliver the project
• £16.6 million to Net Zero Technology Centre - at the heart of the Net Zero Technology Transition Programme (NZTTP) are seven interconnected projects focussing on reducing emissions and transforming the industry to an integrated, digitally enabled energy system, with the North Sea as the nexus
• £6.5 million for a Global Underwater Hub - the vision for the Global Underwater Hub (GUH) is to transform the globally competitive underwater sector in the UK to accelerate the transition to net zero, drive innovation and growth and make a step change in the development and internationalisation of technology and services
• £15.2 million to the Aberdeen Hydrogen Hub - the Aberdeen Hydrogen Hub will play a leading role in supporting the Scottish Government's Net Zero Emissions target and presents the opportunity to deliver Scotland's first commercially investable, 'green hydrogen' production facility focussed initially on the decarbonisation of transport

The ETZ, NZTTP and the GUH have completed their funding application and are at delivery stage. The Aberdeen Hydrogen Hub is nearing funding application completion and will be in delivery shortly.

Contribution to economic development: Investment of £75 million over 5 years into the North East to support transition to renewable energy and support a thriving energy economy. ETZ is part of the wider harbour redevelopment works supported by the Aberdeen City Deal

Contact for public enquiries: email: Neil.purdom@gov.scot

Programme name: Emerging Energy Technologies Fund (EETF) – including hydrogen and CCS.

Programme description: Support carbon capture and storage (CCS), negative emissions technologies (NETs) and hydrogen development.

Estimated total investment: £180 million.

How is programme being funded: Scottish Government has committed £180 million as part of Climate Change Plan over 5 years. Proposed £100 million on Hydrogen and £80 million on CCS. Capital funding awarded through low carbon fund.

Programme delivery timetable: 2021-22 to 2025-26

Latest programme progress: Scheme design and stakeholder engagement have commenced.

Exploring the links with other low carbon funds, including Scottish Industrial Energy Transformation Fund (SIETF), Energy Transition Fund (ETF), Low Carbon manufacturing and Low Carbon transport, this is to ensure these work seamlessly alongside each other to support the development of a Hydrogen economy and CCUS network, and do not duplicate one another.

We are considering how funds could be assembled to support big projects and entice private / commercial partnership and investment. We are working constructively with the UK Government to support the development of CCS in Scotland, in particular the Scottish Cluster. To this end, we have continued to advocate for the cluster in our engagement, and have offered the £80 million allocated to CCS from the EETF.

As EETF is a capital fund it could, potentially, be supported by preliminary resource work through other funds, for FEED studies or equivalent. We aim to draw on the lessons learned from other funds, particularly LCITP.

Contribution to economic development: The Emerging Energy Technologies Fund (EETF) will, over the next four years, invest £180 million in the development of hydrogen and CCUS industries in Scotland and support the development of negative emissions technologies - creating attractive diversification opportunities and new, sustainable green jobs for those currently working in the oil and gas industry.

Contact for public enquiries: CCS email: lewis.hurley@gov.scot / EETF email: EETF@gov.scot