Scottish Industrial Energy Transformation Fund (SIETF): state aid guidance

The Scottish Government aims to ensure that the information published in this guidance is up-to-date and accurate, but information given here is not a substitute for taking legal or professional advice, which is the responsibility of the applicant. We cannot accept any liability for actions arising from the use of our guidance. Read the general guidance on state aid.

The EU state aid General Block and Exemption Regulations (GBER) allow funding to be provided under the Scottish Industrial Energy Transformation Fund (SIETF), covering a range of types of state aid which, provided certain conditions are met, do not require individual approval in advance of being granted. The UK left the EU on 31 January 2020 and entered a transition period until the end of 2020. State aid rules may change in January 2021 depending on negotiations with the EU, which could have implications for SIETF grant awards. The Scottish Government continue to monitor the situation and will update guidance as required. 

Competition 1 – deployment

The deployment call for the SIETF supports businesses in Scotland to invest in the deployment of energy efficiency technologies for industrial processes. Funding provided under this competition must be compliant with Article 38 under the GBER. Article 38 is used for investment aid for energy efficiency measures.

Eligible costs under article 38 are defined as: “the extra investment costs necessary to achieve the higher level of energy efficiency". They shall be determined as follows:

• where the costs of investing in energy efficiency can be identified in the total investment cost as a separate investment, this energy efficiency-related cost shall constitute the eligible costs
• in all other cases, the costs of investing in energy efficiency are identified by reference to a similar, less energy efficient investment that would have been credibly carried out without the aid. The difference between the costs of both investments identifies the energy efficiency-related cost and constitutes the eligible costs.

The costs not directly linked to the achievement of a higher level of energy efficiency shall not be eligible. It is the responsibility of applicants to demonstrate that the costs they expect to be eligible are necessary, directly linked to achieving a higher level of energy efficiency and would not be incurred in a counterfactual case. Examples of the type of costs that are eligible would be subcontractor costs, material costs and labour costs.

There are stipulations of when aid cannot be granted in the GBER. For Article 38 it states that: “aid shall not be granted under this Article where improvements are undertaken to ensure that undertakings comply with Union standards already adopted, even if they are not yet in force.”

This is in reference to the EU Best Available Techniques reference documents (BREFS).

The maximum funding that an undertaking can claim is €15 million per project. Currency conversion is applied at the point of award. Undertakings are entities engaged in an economic activity, regardless of their legal status and the way in which they are financed. An undertaking can fund and receive aid on multiple projects as long as it is able to show that each project is a separate investment. If aid has already been granted to an individual project, then the maximum aid that the project can receive is €15 million minus the amount already received.

The GBER also specifies the maximum aid intensity that undertakings can receive - this is the maximum proportion of eligible costs that can be grant funded. The size and location of an undertaking determines the aid intensity that will applied. The table below describes how these aid intensities vary.

The Scottish Government can offer additional financial support to businesses conducting projects in ‘assisted areas’, described in the table as “a” and “c” areas. Check the regional selective assistance map.

Read the definitions of different organisation sizes.

Applicant undertaking size	Funding as a proportion of eligible costs (aid intensity)	Located in “a” areas	Located in “c” areas
Micro/small	50%	65%	55%
Medium	40%	55%	45%
Large	30%	45%	35%

Competition 2 – studies 

The studies call for the SIETF supports businesses in Scotland to apply for financial support for feasibility and engineering studies to develop energy efficiency and deep decarbonisation projects for subsequent deployment. Funding provided under this competition must be compliant with Article 25 under the GBER. Article 25 is used for research and development projects.

Eligible costs

Applicant undertaking size	Feasibility studies	Experimental development	Industrial research
Micro/small	70%	45%	70%
Medium	60%	35%	60%
Large	50%	25%	50%

Further information relating to Article 38 and Article 25 can be found in the GBER FAQ document.