Urban Community Energy Fund – The Way Forward For Small Projects

Urban Community Energy Fund – The Way Forward For Small Projects

In November 2014 DECC published details of the Urban Community Energy Fund (UCEF), which is a financial support scheme aimed at urban communities across England wanting to set up renewable energy generation projects in their area. This is a £10m fund to kick-start renewable energy generation projects in urban communities across England. Community groups will be able to access grants and loans to support the development stages of a renewable energy project that will bring significant benefits to the local community. UCEF is the counterpart to the Rural Community Energy Fund (RCEF), which funds renewable energy projects in rural communities. UCEF can potentially fund all projects that are not considered to be in a rural area.

Grants of up to £20,000 are available for the more speculative, early stages of a project’s development, such as initial public consultation and preliminary viability studies to determine suitable technologies, and to secure basic land rights. These grants will get groups to the stage where they know whether detailed project development is worthwhile.

UCEF can also provide contingent loans of up to £130,000 towards the detailed project development costs. This could include the costs of developing and submitting a full planning application, carrying out community consultation, securing all necessary permits and grid connections, arranging power purchase agreements and costing contracts for supply and installation. This will allow groups to develop a robust business case to attract further funding for the construction phase, this enables a project to be ‘investment ready’ to attract the larger funding which would be required for the construction and installation.

These are loans, not grants but they are contingent loans, because they are only repayable if the project is successful, however, other available UCEF grants may be included in the total package of assistance for a project. If a project has already been awarded a UCEF grant, there is no obligation to take up a UCEF loan over any other private funding that the project may seek. The UCEF loan would be repaid from the income generated from sales of electricity produced. There is a one-off 45% premium, added to the loan. So a loan of £100k will require repayment of £145K but there is no accumulated interest over the term of the loan. The object of this premium is for successful projects to help fund the next project or offset the cost of any that may be unsuccessful. In general terms, the value of a UCEF loan should not exceed 20% of the projects likely construction costs. All projects will be assessed on a case by case basis and there is no maximum or minimum project size that is eligible for UCEF

To be eligible to apply for a loan a group must;

  • Be developing a project in an urban area.
  • Be incorporated as a legal entity that can receive Government funding.
  • Have a bank account requiring at least two signatures from unrelated people to make a withdrawal.
  • Show that the project will benefit the local community directly.
  • Not have received more than £150,000 in grants or subsidies from public bodies during the last three years
  • Be proposing an acceptable for of renewable technology for the project.

Eligible technologies are;

  • wind turbines
  • hydropower
  • solar photo voltaic
  • solar thermal
  • ground, water and air source heat pumps
  • anaerobic digestion
  • biomass
  • low carbon/renewable heat networks
  • gas combined heat and power (CHP) units

Community Energy Strategy

The fund was a key commitment in the government’s Community Energy Strategy, which was launched in January 2014. The strategy sets out how communities can help power the country and protect the planet while helping consumers save money on their energy bills.

For more information go to Urban Community Energy Fund

Information from The Department of Energy & Climate Change (DECC)

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