Social Housing Net Zero Heat Fund - call for funding applications - 2022

The application process

Online workshops

We strongly recommend that projects participate in one of the workshops although it is not mandatory.

The workshops have been developed to provide projects with background information to the call, the application process, guidance around project eligibility and application criteria as well as offering an opportunity to engage directly with the team.

Workshop attendee lists

Workshop attendee lists will not be circulated

We are unable to distribute delegate information for any of our workshops. Any slides or presentations used will be made accessible to attendees

Support

In addition to the online workshops, a number of updated guidance documents are available on the Scottish Government SHNZHF website including the call information, the application form and associated guidance.

As this is an open and transparent process, dedicated one to one support to assist with the completion of the application form is not available.

This funding is for social housing projects

Only applications from registered social landlords, local authorities and ESCOs will be considered.

Number of applications per housing provider

There is no limit to the number of applications a single social landlord, local authority or ESCO can submit. Each application must only cover one project and the projects must be in different location. If the projects are in the same location, the project/system proposed should be integrated.

Applications will be assessed by the Scottish Government and technical experts

The process for assessing project applications is a robust one. Applications will be assessed by the Scottish Government supported by external expertise will be called up as required. 

You must supply all the mandatory information and supporting documentation

Projects must to comply with the criteria set out in the invite and application. This includes the submission of all mandatory project documentation. Missing documentation will impact on the evaluation of the project. Missing documentation will not be requested after the an application has been submitted.

Applications for funding can be withdrawn after being submitted

You are able to withdraw your application from the process prior to an award being made, however we would caution that the assessment is resource intensive and expensive. It is a condition of funding awards that if a project withdraws from the process following grant award without completing the project, any funds paid will be recouped by Scottish Government

Decisions on funding can be appealed

Projects seeking funding through the call will be subjected to a robust evaluation process before recommendations and decisions are made.  Projects that are concerned with decisions made should raise these in writing within 7 days from outcome notification. In this instance an independent assessor will review the decisions made providing clear evidence as to whether the decision/ recommendation made by the panel was correct when assessed against the eligibility criteria. Projects will be unable to provide any further information or answer any questions as the appeal relates to information submitted within the original application deadlines.

Support is available to assist submitting applications which contain large files and attachments

The SHNZHF Support Team have considered the best options for the submission of project documentation and will be on hand to manage any submission issues. All project documentation should be submitted by email to netzerosocialhousing@gov.scot. You may need to send more than one email in which case these should be clearly marked ‘email 1’, ‘email 2’ and so on.

Funding and support

There is a limit to the amount of funding offered to each project

Total capital funding available to projects from SHNZHF is up to £10 million for a single project. Projects must provide a minimum of 50% match funding.

50% is the maximum intervention rate that will be considered for all projects under this invitation. Where applicants or project types have previously received SHNZHF support, lower intervention rates may be considered.

Enabling Support may be considered on a project-by-project basis.

The financial support for capital projects will be in the form of grant funding

Eligible capital costs are:

• financial costs incurred for the purchase of physical assets
• costs of project build, installation and construction
• costs of project commissioning
• non-reclaimable VAT for eligible capital costs

Match funding may need to be paid back to the funder

Match funding may need to be repaid, depending on the contractual issues between the project and match funder. If match funding is provided by a District Heating Loan, this will need to be repaid. Grant funding will not be released in advance of need. Projects can only seek payment of grant following the successful completion of agreed milestones or agree deliverables. This also limits the potential for SHNZHF having to reclaim grant.

Evidence is required in order to demonstrate that a project has required match funding in place

All projects must be in a position to provide SHNZHF with copies of documentary, legally binding contracts or loan agreements, as evidence of having secured the require match funding.  We will only finalise funding awards to projects i.e. countersigned grant offer letters, upon receipt of this documentary evidence. SHNZHF reserves the right to contact the match funding providers named in the application to request confirmation of their commitment to investment in your project.

Project cannot make up 50% match funding with public funds.

Projects cannot make up any of the match funding with other core government funding. Please get in touch with us at netzerosocialhousing@gov.scot

if you are unsure as to whether the funding you are using will be eligible for use as part of match funding.

Projects already in receipt of financial support from the Scottish Govenement may be eligible

Applications will be considered on a case by case basis. Full details of the support already being received should be included in the application form. The SHNZHF team will then consider the nature and scope of the Scottish Government financial support already awarded and whether there are any additional elements of the project eligible for SHNZHF support.

You must monitor and report information

All projects receiving funding through SHNZHF must adhere to an agreed monitoring and governance process. Projects must complete and submit project progress reports at regular monitoring intervals e.g. monthly reports as agreed by the SHNZHF project support team. Projects will be expected to complete and submit a reporting template in advance of all project progress and monitoring meetings.

These reports will provide the evidence that the project milestones have been reached and that projects can submit an invoice, together with supporting documentary evidence, for the release of grant funding.

Project monitoring and stage gateway undertaken by SHNZHF Partners or an external provider contracted by SHNZHF to assess progress against project milestones.

The final project report shall detail the forecast capital or developmental costs and actual capital or developmental costs for the entire project. This report will include details of the progress made towards the criteria identified by SHNZHF Partners through this fund as well as a likely future timeline for achieving exploitation of project results. The report will also include details on the electrical generation performance achieved by the facilities where this was a project aim.

Following the end of support provision, SHNZHF Partners will require annual reports for a period of up to 5 years after completion of the project. These reports will cover the progress of the project and technology towards commercialisation and economic impact in Scotland.

The fund will remain open to applications until the funding limit is reached

This fund is a rolling fund and will remain open to applications until the funding limit is reached. Funding is capped at £30 million per annum for zero emissions heating projects and energy efficiency projects this year. Funding will be not be allocated equally across the checkpoints and applications will be considered in the order they are received as such we recommend submitting your application as early as possible

Match funding from the District Heating Loan Fund

A loan from the District Heating Loan Fund would be an eligible source of match funding for your zero emission heating project. Loan funding can make up to 30% of the total project costs. This approach encourages the growth of co-funding and allows for risk-sharing between SHNZHF and zero emission projects. All match funding being provided from the District Heating Loan Fund would not demonstrate risk sharing as both funds are provided by the Scottish Government.

You can still apply if you have a construction partner

Having an existing contract with a construction partner/supplier does not necessarily preclude you from SHNZHF funding

However, this call requires projects to demonstrate the requirement for SHNZHF funding. If you have an entered into a contract to deliver your project based upon your current level funding, it could be difficult for you to demonstrate the need for SHNZHF intervention.

Project eligibility requirements

Zero emission technologies eligible for funding

Applications will be considered from project using the below technologies

• air source heat pumps
• ground source heat pumps
• water source heat pumps
• biomass boilers
• connection to existing heat networks
• High Heat Retention Storage Heaters*

The following technologies can be considered in conjunction with zero emission heat solutions:

• solar panels
• battery storage
• thermal storage (High Retention Storage heaters will only be considered eligible in conjunction with solar panels, battery storage or another source of renewable electricity generation. Projects proposing connection directly to the grid will not be considered eligible for support).

Water/waste water project may be eligible 

Water/waste water projects can be considered alongside heat generation.   Projects that are solely about water demand reduction would not be eligible.

Biogas CHP technology is eligible

Renewable gas sources (e.g. hydrogen/bio-methane) are eligible. However projects that utilise of natural gas in CHP technology are not eligible for funding.

You must include a feasibility study

You must have completed a feasibility study submitted with the application form.

The feasibility study will provide SHNZHF with an accurate assessment of the practicality of a proposed project or system. This document must objectively cover the strengths and weaknesses of the project proposal and make a recommendation about project scope. It should also set out at a high level the total cost for delivery and an assessment of the value or benefit to be derived from the project. Projects at the proof of concept stage will not be supported.

Your application must meet all the eligibility criteria

Projects are required to demonstrate that they meet all the eligibility criteria listed in the call document

The SHNZHF Assessment Panel will assess and evaluate applications received against all of the eligibility criteria listed in the call document and in the application form. If your project cannot meet these criteria, it is unlikely to be successful in securing funding.

Your application should include indexation

Where appropriate, indexation should be applied to cashflow projections in the financial model.

You must include a plan for tenant engagement

The call invitation requires all applicants to demonstrate a plan is in place for tenant/community engagement to help form and develop the project within the local community.

Ideally, engagement should start as early as possible and should continue throughout the project.

When planning community consultation it may be helpful to consider:

• what should be the geographical area to engage?
• within that area, who should be the appropriate contacts and communities of interest for consultation?

For more information on identifying stakeholders, see Scottish Government Good Practice for Community Benefits: Good Practice Principles - Local Energy Scotland

Evidence of greenhouse gas reduction

Applications for funding should contain robust evidence of the potential of the project to reduce greenhouse gas emissions.

There is no minimum target for reduction of greenhouse gas emissions per £ of support funding. The invitation is an open call and will be scored against a number of criteria including the reduction of greenhouse gas emissions.

Projects that could be scaled up

Applications are welcome from projects that have sufficient funding but that could be scaled up or can be delivered more quickly with additional grant funding from the SHNZHF.

Projects that have sufficient funding to begin can proceed prior to a grant being awarded from SHNZHF. However, any costs incurred before a SHNZHF grant is awarded would be ineligible and would not form part of the overall project costs. They would not contribute toward the minimum of 50% of project match funding.

Dissemination strategy and five year reporting

Projects are required to agree to a dissemination strategy and to a five year reporting period after commissioning

The Social Housing Net Zero Heat Fund is designed to deploy affordable, zero emission heat provision to social housing across Scotland through commercially viable projects. It is a requirement for projects to report on the progress of the project and technology towards commercialisation and the social and economic impacts in Scotland. Sharing the learning from and between projects that are funded through SHNZHF is a key aim of the programme and a requirement to receive funding.

Procurement

Private bodies and the Public Contract Regulations

Projects are advised that as the funding is up to or less than 50%, private bodies would not be subject to the application of the Public Contracts Regulations.

Projects should therefore:

• follow procurement rules as they apply to your organisation.
• evidence that they have followed their organisation’s procurement rules.
• put in place fair, open and transparent procurement arrangements to support the delivery of the project. Wherever possible this should include an element of competition to ensure best value. Where a single source is selected without competition, the Project should be in a position to justify this procurement route to the SHNZHF.

Professional contractors and advisors

Projects can use their own match funding to appoint a professional contractor.

Starting the project before a grant has been awarded

Prospective applicants start the process of procurement, statutory approvals etc before an grant has been awarded at their own risk

The procurement process can begin before a SHNZHF funding decision has been made. This is entirely at the project’s own risk and any costs incurred before a SHNZHF grant is awarded would be ineligible and would not form part of the overall project costs. They would not contribute toward the minimum of 50% of project match funding.