Local Energy Challenge Fund

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1 Guidance for applicants to the Local Energy Challenge Fund Managed by Local Energy Scotland as part of the Scottish Government s CARES programme Version 1 15th August 2014

2 Local Energy Challenge Fund Guidance for applications Please note only approved Phase 1 development projects can submit a Phase 2 challenge fund application. This guide provides information on applying to the Local Energy Challenge Fund. This document should be read in advance of submitting any application, and should be referred to throughout the Local Energy Challenge Fund process. If applicants have any questions about these guidelines they should send these to The Local Energy Challenge Fund was launched on the 18 th August by the Scottish Government to support a transition to a different approach to energy generation and consumption. The Local Energy Challenge Fund will provide up to 20m in grants and loan funding for major demonstration projects providing transformative and innovative local energy solutions. The Local Energy Challenge Fund will operate in two phases; Phase 1 (Development Funding) and Phase 2 (Challenge Funding). Phase 1 is open to applications between 18 th August and 10 th October Application forms are available on the scheme website: Grants up to 30,000 are available to support you to develop and progress your project to ensure a strong application is submitted for Phase 2 and early barriers and feasibilities are addressed. You will also receive support through Local Energy Scotland to develop your Phase 2 Local Energy Challenge Fund applications. Those interested in the Local Energy Challenge Fund should register interest here to ensure you are kept up to date as the scheme progresses. The following diagram outlines the steps within the Local Energy Challenge Fund, from initial applications to final projects. Figure 1 Flow diagram showing the stages of the Local Energy Challenge Fund Phase 1 Development Fund application Assessment by Challenge Fund panel Phase 1 grant recipients work towards a Phase 2 Challenge Fund Support from Local Energy Scotland Grants awarded to successful applicants and projects supported to deliver during 2015/1016 Assessment by Challenge Fund panel Support from Local Energy Scotland Page 2 of 20

3 You must receive Phase 1 approval to be eligible for Phase 2. Phase 1 is a simple application stage where your project will be reviewed by the Local Energy Challenge Fund panel. This is an essential step of the fund process, even if you do not require development funding. We anticipate the Local Energy Challenge Fund panel will award Phase 1 funding/support for up to 20 projects. Only those projects receiving Phase 1 support will have the opportunity to develop and submit an application for Phase 2 challenge funding; such funding is likely to be awarded to up to 6 projects. The Guide This guide has four sections: Section A provides the background on the context of the Local Energy Challenge Fund Section B provides details of the Local Energy Challenge Fund, its objectives and what it plans to do. Section C provides guidance for Phase 1 development funding. Section D provides guidance for Phase 2 challenge funding. Please see for supplementary information on State Aid and de minimis funding. Please register your interest and monitor the frequently asked questions (FAQs) via to ensure you have the most up-to-date information to support your application. Page 3 of 20

4 Table of Contents SECTION A: THE CHALLENGE FUND BACKGROUND... 6 Community energy in Scotland...6 What changes are needed to support community energy?...6 Commitment in the Community Energy Policy Statement...7 Local energy economies...7 SECTION B: THE LOCAL ENERGY CHALLENGE FUND... 8 Overview...8 Objectives...9 Timetable...9 Questions and points of clarification...9 SECTION C: GUIDANCE FOR PHASE 1 DEVELOPMENT APPLICATIONS Phase 1 development funding Working with Local Energy Scotland What project activities can be supported? Who can apply for Phase 1 development funding? Eligible Phase 1 Activities Maximum and minimum awards for Phase Appraisal of Phase 1 applications Award of Phase 1 grants Phase 1 grant payments Reporting during Phase SECTION D: GUIDANCE FOR PHASE 2 CHALLENGE FUND APPLICATIONS Who can apply for Phase 2 challenge funding? What project activities can be changed from the Phase 1 application? Eligible Phase 2 activities and costs How should Phase 2 budgets be presented? How should evidence and results be communicated? Page 4 of 20

5 Intellectual property rights What is the duration of grants? What documentation is required for a Phase 2 application? How will Phase 2 applications be appraised? When will decision on the award of Phase 2 grants be known? How will payments be made? Reporting during Phase Reporting beyond project completion Page 5 of 20

6 SECTION A: THE CHALLENGE FUND BACKGROUND This section sets out the background to the Local Energy Challenge Fund, and the reasoning for this new scheme. The Local Energy Challenge Fund will offer grant and loan funding for major demonstrator projects providing transformative and innovative local energy solutions. The Challenge Fund is a direct development of current Community and Renewable Energy Scheme (CARES) support and will have up to 20M to distribute. Community energy in Scotland The Scottish Government is committed to supporting community and locally-owned renewable energy projects. This builds community capacity, empowers groups, and provides much-needed sustainable income to areas of Scotland in need of regeneration. The community energy movement has grown rapidly over the past decade and has now reached a new stage of maturity. Rather than simply receiving and spending a capital grant, many local groups are now developing innovative, strategic solutions to meet the needs and issues they face, including solutions which reach beyond community renewable energy to take an integrated community energy approach. The Scottish Government encourages this grassroots activity and wishes to further support the empowerment and enhancement of Scotland s communities through engagement with renewable energy technologies. What changes are needed to support community energy? Many community groups face area-specific challenges in progressing their renewable energy projects. Grid constraints, long lead times and fuel poverty affect communities across Scotland, and there is an opportunity to link up energy supply and demand to transform Scotland s energy use. The CARES Infrastructure and Innovation Fund (IIF) supports projects which change the way communities generate and use energy, focusing on supply and demand and creating sustainable systems. The IIF projects have allowed community groups across Scotland to explore innovative, sustainable solutions to otherwise insurmountable issues but more support is required to support cutting edge transformational projects. The new Local Energy Challenge Fund has been designed to help to aggregate and advance communityled projects, such as those being supported under CARES IIF, with other local initiatives, including those led by local authorities, housing associations, universities and private businesses, in order to demonstrate a holistic local low carbon energy approach. Page 6 of 20

7 Commitment in the Community Energy Policy Statement The Scottish Government has implemented the one year Local Energy Challenge Fund to progress demonstrator projects to show the potential of local energy systems across Scotland. The 2014 Community Energy Policy Statement outlines the Scottish Government s desire to build on the experience and success of the community energy sector to date, and work towards visionary project designs to show what can be achieved. The technologies and commercial models required to deliver innovative local energy systems need to be demonstrated in practice in order to de-risk this approach and unlock further commercial investment. The Local Energy Challenge Fund will act as the forerunner to the community stream of a major 6 year programme of wider area-based support for low carbon infrastructure in Scotland, aiming to convert proposals into investible propositions through project management and partnership-working. Local energy economies Community energy faces a number of barriers to its growth: energy projects are often high capital cost and can be subject to delayed grid connection. The UK subsidy regime is currently under reform, creating uncertainty and new risks, particularly for smaller scale development. The challenge is to encourage Scotland s communities to grasp the opportunities of a whole system approach to community energy. Low carbon energy systems can involve the integrations of a range of technologies: renewable energy generation coupled with energy storage, the use of waste heat and community heat systems, smart grids, demand reduction measures and improvements to energy efficiency. Together, these can lower fuel bills for consumers and even create new revenue streams for community investment. By moving towards a more decentralised energy system, with local systems of energy production, distribution and use, Scottish communities have opportunities to attract new investment, reduce their carbon impact and take ownership and control of new assets, with revenue streams. We now require a wider approach to community energy, built on existing experience of community engagement, but focusing on new forms of collaboration with local authorities and local businesses, using smart technologies, and new business models that capture and retain more value at the local level. These opportunities will be more difficult to conceive, but the benefits are potentially transformational especially where projects combine heat, electricity, waste and transport solutions. To provide an early impetus, the Local Energy Challenge Fund has been established to invite demonstrator projects for new community low carbon energy systems, encouraging innovation in community projects in Scotland. International examples of projects are available in Section 6 of the Scottish Government s Community Energy Policy Statement, (Draft for public consultation). Page 7 of 20

8 SECTION B: THE LOCAL ENERGY CHALLENGE FUND This section provides an outline and summary of the Local Energy Challenge Fund, its objectives and what it plans to do. Overview The Local Energy Challenge Fund will be offered under CARES, and draws on experience gained through the existing CARES Infrastructure and Innovation Fund. The Challenge Fund will be open to a range of applicants including local authorities, universities, housing associations and private sector companies, as well as community groups and co-ops. Phase 1 support is available to help develop challenge fund applications and concepts. It is anticipated that around 6 projects will receive Phase 2 awards, to be funded in 2015/16 to demonstrate the socio-economic benefit of integrating low carbon energy sources in local energy systems and supply chains in a way that maximises system efficiency and adds value for local communities. The purpose of the Local Energy Challenge Fund is to demonstrate the value and benefit of a local low carbon energy economy approach, which could be applied more widely in Scotland. This will support the Scottish Government s long term target of reducing greenhouse gas emissions by 42% by 2020 including: Renewable sources to generate the equivalent of 100% of Scotland's gross annual electricity consumption by Similarly, a target has been set for renewables sources to provide the equivalent of 11 per cent of Scotland's heat demand by 2020; Reducing the local and global environmental impact of Scotland s consumption and production. Feeding into this is the target to deliver 500MW of community and locally owned renewables by Grant funding is available on a competitive basis to develop large-scale local low carbon demonstration projects which show a local energy economy approach linking local energy generation to local energy use, including projects that wish to develop innovative distribution and storage solutions, and with an overall aim to create more local value and benefit. Projects that are funded through the Local Energy Challenge Fund should demonstrate: Partnership and collaborative working Innovation Added local value The Local Energy Challenge Fund is a two phase scheme. Phase 1 will support applications through a grant of up to 30,000, to develop the project proposal, complete early feasibility and prepare for Phase 2. Support will be available from Local Energy Scotland throughout both phases. Intervention levels of up to 100% are available. Phase 1 applications will be assessed by the Local Energy Challenge Fund Panel. Page 8 of 20

9 Objectives The fund has been set up as a challenge fund and we want to inspire applications that will transform our approach to energy. The objectives listed are set as a guide and we would encourage applicants to review Chapter 6 of the draft Community Energy Policy Statement for exemplar projects. The objectives of the scheme are to demonstrate the potential for additional value and benefit to local communities by: Linking local energy demand with local renewable energy generation. Overcoming barriers relating to grid capacity issues. Applying energy storage and active network management. Delivering renewable heat and electricity to local consumers. Encouraging local finance solutions. Examples of projects that could be supported under the Local Energy Challenge Fund include: Demand-side management to maximise local energy production. Linking local generation to local district heating scheme. Smart electric vehicle charging system linked to local generation. Alternative low carbon marine transport. Energy storage. Hydrogen injection into gas grid or for sustainable transport. Consortia approaches to sharing grid costs. Local finance to retain local value. Local energy master-planning. Integrated energy efficiency. Timetable The full timetable for calls under the Local Energy Challenge Fund is: 10 th October 2014 Application deadline for Phase 1 Challenge Fund applications 1st November 2014 Award projects Phase 1 funding to work up Phase 2 Challenge Fund Applications 6 th February 2015 Phase 2 Local Energy Challenge Fund Applications submitted 9 th March Local Challenge Fund projects awarded funds 31 st March 2016 Grant funds must be spent Questions and points of clarification Questions and point of clarification about the Local Energy Challenge Fund should be ed to The question and responses will be published on an FAQ page available on Page 9 of 20

10 SECTION C: GUIDANCE FOR PHASE 1 DEVELOPMENT APPLICATIONS This section sets out the processes and actions for applicants during Phase 1. This includes working with Local Energy Scotland as the manager of this scheme. Phase 1 development funding Phase 1 funding will be available from 1 st November 2014 to 6 th February 2015 to help support the development of potential projects to the main Local Energy Challenge Fund. Phase 1 funding will be delivered as de minimis funding. The de minimis exemption permits aid of up to 200,000 to an individual recipient (from all sources) in any rolling three-year fiscal period. If you are receiving any other de minimis aid from another source, you must declare this as part of your application in Section 4 of the application form. As the applicant, it is your responsibility to ensure that any award that may be provided does not breach the 200,000 ceiling. The State Aid de minimis ceiling is expressed in Euros. This can be equated to pounds sterling by using the rates shown on the EU website: uage=en Further information on de minimis State Aid is available at Working with Local Energy Scotland Contact must be made with Local Energy Scotland in advance of submitting a Phase 1 application. This can be done through the Local Energy Scotland website or by ing Potential applicants will then be contacted by Local Energy Scotland and regular communication should be expected. Applicants who successfully apply for Phase 1 funding will be supported to spend this grant, and to progress to a Phase 2 application. What project activities can be supported? The Local Energy Challenge Fund aims to support large-scale demonstrator projects which involve innovative solutions to energy production and use. Page 10 of 20

11 Phase 1 applications for funding should be focused on the first stages of delivery, but proposed outputs and projected project plans for the final Phase 2 project should be in an initial form at this stage. The Scottish Government recognises the challenge of delivering these projects and is providing funding and management support to progress projects to the stage where they are ready to begin delivery. Who can apply for Phase 1 development funding? Applications are expected from organisations such as a community group, registered charity, community benefit society, community interest company, local authority, registered social landlord, academic institution, third sector, or a commercial organisation. Applications to Phase 1 can be made by a single organisation or via a consortium/ partnership with a project lead organisation that receives funds and signs up to the grant conditions. Please note that while single applicants will be considered for Phase 1, applicants to Phase 2 funding must be a consortium or partnership. Evidence must be provided by Phase 1 single applicants as to how they intend to collaborate with additional partner(s) for Phase 2. All Phase 2 projects must have applied to and been approved for Phase 1, even if there is no need to complete any of the activities funded as part of Phase 1. Eligible Phase 1 Activities Phase 1 funding is expected to support development towards a full project proposal and application for Phase 2 funding. Eligible Phase 1 activities may cover a number of areas including: Feasibility studies. In-depth research. Development of prototype. Technical advice. Progressing applications for planning, grid connection or other consents. Progressing procurement (Phase 2 applicants must show evidence of the tendering process followed for any contracted work). Hosting meetings with potential consortia members for Phase 2. Hosting meetings between applicant consortia and others necessary to further the development of the project. Developing detailed project plans, risk assessments, and detailed budgets (these will be required for Phase 2 applications). Formalising a consortium or partnership arrangement. Addressing legal issues. Addressing State Aid issues and identifying the relevant exemption(s) for Phase 2 applications (this will be required for Phase 2 applications). Securing match funding. Strategy work and option appraisals. Progressing early stages of Local Energy Challenge Fund projects (although projects must demonstrate an exit strategy if funding is not awarded). Page 11 of 20

12 Maximum and minimum awards for Phase 1 The maximum single award is 30,000 per project. There is no minimum award threshold and indeed we anticipate some projects may not require development funding, but they must submit a fully complete Phase 1 application. The application will be evaluated for approval to progress to a Phase 2 application by the Challenge Fund Panel. You are strongly advised not to commit yourself to any expenditure on which grant aid may be sought, until after a decision has been made on your application. If an offer letter is sent to you, you should sign and return it before incurring costs. We will not give grant funding to cover incurred costs that have started before an offer letter has been signed. Appraisal of Phase 1 applications Phase 1 applications must be received by 10 October 2014 and will be submitted to an external assessment panel for review. Phase 1 grants will be awarded based on the quality of applications submitted, their alignment with the Local Energy Challenge Fund objectives and the outcome of assessment by the Challenge Fund Panel. Award of Phase 1 grants It is expected that grants will be approved on 1 November If your application for Phase 1 funding is successful, you will receive a grant offer. This offer may be subject to conditions that need to be met. The grant offer letter, including the terms and conditions of grant, form the agreement between your organisation and the Energy Saving Trust (as the lead organisation in the Local Energy Scotland consortium the Energy Saving Trust will be the grant awarding body). You must sign the offer letter and return it to establish the agreement. Where bids are not successful, we will send you a letter informing you that your application has been unsuccessful, and indicating the reasons for this decision. All decisions made by Energy Saving Trust, Scottish Government and the Challenge Fund Panel on funding are final. Phase 1 grant payments Phase 1 grants will have been agreed by Local Energy Scotland with applicants to the scheme. The grant agreement sets out all terms of the funding partnership and the duties and responsibilities of both parties. Local Energy Scotland will only release funds after signing of the grant agreements. Grantees must follow the conditions in their agreements on release and use of funds. Local Energy Scotland recognises the importance of remaining flexible and pragmatic throughout project implementation and will consider changes to ensure the most effective use of funds. Local Energy Scotland should be requested to approve any changes to the overall impact and outcome of projects and any significant changes in outputs. Requesting a significant change may necessitate a reexamination of project purpose or implementation. Local Energy Scotland must approve any changes Page 12 of 20

13 that require the movement of more than 10% of the total budget between budget lines. An updated work plan and budget may also be needed when requesting changes. No extension to the project timescales are expected given that the grants are for a three month period. However, if circumstances outside the control of grantees occur that impact on delivering the expected outputs in the Phase 1 period, grantees must inform their Local Energy Scotland contact as soon as possible. Local Energy Scotland will consult with Scottish Government to determine the best course of action. Funds should be claimed against evidence of expenditure which will usually take the form of a receipted invoice accompanied by evidence or copies of work undertaken. Should this not be possible, you may submit evidence of lack of funds and the payment can be made in advance. A claim form will be issued with your letter of offer. After each stage of work is completed you will be expected to complete and submit a claim form. Claims are submitted to Local Energy Scotland for processing. Claims will be processed within 21 working days of any claim being received by Local Energy Scotland. Finance is released against work carried out rather than a lump sum on approval. Reporting during Phase 1 Each grantee must maintain regular communication with the Local Energy Scotland nominated contact. Short updates will include: A brief monthly narrative (due by the 15 th of the following month). This may take the form of an update call with Local Energy Scotland. A final financial and narrative report within 15 days of the end of the project. Local Energy Scotland, who manage the Local Energy Challenge Fund on behalf of the Scottish Government, will review all reports and will address any issues in these and contact grantees accordingly. They will be the first point of contact between grantees for any project reporting. Page 13 of 20

14 SECTION D: GUIDANCE FOR PHASE 2 CHALLENGE FUND APPLICATIONS This section provides guidance for completing a Phase 2 application under the Local Energy Challenge Fund. This guidance does not apply to the Phase 1 selection process. Who can apply for Phase 2 challenge funding? Only projects that have been awarded Phase 1 development support can apply to the Phase 2 challenge fund. Applications must be from a consortium/ partnership with a project lead organisation that receives funds and signs up to the grant conditions. The consortium/ partnership must consist of at least two of the following; a community group, registered charity, community benefit society, community interest company, local authority, registered social landlord, academic institution, distribution network operator, third sector, or a commercial organisation. The lead organisation can be any of the organisations listed above. Applicants must be registered in the United Kingdom, and the projects must be developed and take place within Scotland. Only projects that have successfully been approved for a Phase 1 will be considered. The lead applicant and project objectives can change following phase 1 development activity. This guidance has been included to support projects to consider their Phase 1 application costs and the funding they might need to submit a Phase 2 application. The guidance below does not apply to the Phase 1 selection process. What project activities can be changed from the Phase 1 application? Grants are expected to support activities that will create a large-scale demonstration project with tangible learning outcomes relating to local energy economy systems. Applicants will set out what their project intends to achieve. Phase 1 funding will have been used to fully develop the proposal to a detailed level, in preparation for a panel assessment. It is likely that there will be changes to the project between Phases 1 and 2 where any changes are required, these must be rationalised with research or evidence which has been produced during the Phase 1 period. Page 14 of 20

15 Eligible Phase 2 activities and costs Phase 2 grants can be used to cover reasonable and justified costs of activities which contribute towards the project outcomes. Examples of projects that could be supported under the Local Energy Challenge Fund are listed in Section B, Objectives. For information on State Aid block exemptions, please see Please contact Local Energy Scotland if you have any questions regarding the eligibility of your project: How should Phase 2 budgets be presented? Applicants are asked to present project budgets using the project budget template in the Phase 2 Application Form, adding individual budget lines to suit your project. This should be completed in Microsoft Excel. The budget should be accompanied by a budget narrative. Please note: The maximum single award is 6 million per project which must be spent in financial year Due to the ambition for transformational projects a minimum award threshold of 1 million per project has been set. All budgets should be in British pounds sterling. Breakdown of budgets in UK financial year (1 st April to 31 st March). Applicants should state the forecast cost of actual goods and services delivered, as a proportion of total project costs. Applicants should include any co-financing/cost-sharing arrangements with other donors so that Scottish Government contribution can be seen by line. Applicants should outline and disaggregate any intermediary transaction costs where your organisation is sub-contracting to partners. Please also provide a separate budget breakdown for each individual partner. The inclusion of a budget narrative after the main table makes the decision-making process quicker, as Local Energy Scotland is less likely to revert to your organisation with additional questions. Include a breakdown of individual budget lines where required. In delivery of the work, projects may transfer money between budget lines within any budget subheadings. Where changes to any line are less than 10% of their previous value you do not need to seek approval. However, if you want to make a transfer which changes the previous value of a line by 10% or more, you must request prior approval from Local Energy Scotland. You are strongly advised not to commit yourself to any expenditure on which grant aid may be sought, until after a decision has been made on your application. If an offer letter is sent to you, you should sign and return it before incurring costs. We will not give grant funding to cover costs incurred before an offer letter has been signed. The maximum grant funding that can be provided for an individual project is governed by State Aid rules (see Additional funding is available via commercial Page 15 of 20

16 loans. This will allow 100% of project costs to be funded with a mix of grant and commercial loan. The applicant will be required to demonstrate that enough revenue will be generated to repay the loan. The Local Energy Challenge Fund may grant funding to projects with a longer lifespan than the 12 month grant period between April 2015 and March In that case, the project would have to secure matched funding that extended beyond the lifetime of the grant period, and would still have to spend the Local Energy Challenge Fund grant monies before 31 st March Milestones would be agreed with Local Energy Scotland to ensure that payment is being made on the basis of project progress towards completion, and the project would be expected to submit a final report back to Local Energy Scotland once complete. How should evidence and results be communicated? Projects are expected to give appropriate recognition to the provision of the grant by Scottish Government in any press release or other contact with the media. All projects will be encouraged to increase awareness of their installation and to promote Local Energy Economies. This could be by open days, magazine articles, educational links with schools and colleges, training courses etc. If you commit to such activities in your application, it will increase the chances of success in obtaining funding. Intellectual property rights All intellectual property rights in all material produced by Local Energy Challenge Fund grantees or their personnel, members or representatives in the course of undertaking a project funded by Scottish Government will be the property of the grantees. On receiving and agreeing a grant, the grantee will be expected to grant to Scottish Government a worldwide, non-exclusive, irrevocable and royalty-free licence to use all the intellectual property produced under the project. The purpose of this is to ensure: Organisations will take measures to protect any new technologies, products, approaches, systems, and models created during or as a result of the Local Energy Challenge Fund to avoid any loss of ownership to a third party. That any intellectual property created under the Local Energy Challenge Fund is freely available as a public good. What is the duration of grants? All Challenge Fund monies must be spent by 31st March What documentation is required for a Phase 2 application? Applications must be completed, with the support of Local Energy Scotland, on the application form supplied by Local Energy Scotland. We will not consider applications submitted in any other format. Please ensure that you follow the guidance at the front of the application form regarding formatting and number of words per section. When doing so, please refer back to this guidance document where necessary, and ensure that you have complied with all the scheme requirements. Page 16 of 20

17 Phase 2 applications should provide evidence of: The expected benefits and costs of proposed projects. The role of each consortium partner. The timescale for delivery of the project including any milestones. The expected delivery process. Any associated risks or likely sticking points. Required skills, knowledge and subcontractors, and how these will be met. Project plans. Budgets. You must also submit the following documentation: Summary of overall work plan An electronic copy of lead organisation constitution OR Governance document of consortium; Letters from all proposed partners that they have agreed to be part of the consortia/alliance/partnership that will implement this project. Proof of fair procurement process as agreed with Local Energy Scotland A detailed project budget and narrative, including the eligible cost and aid intensity calculations A detailed risk assessment Evidence of planning/consents, or progress towards these Evidence of community consultation (where relevant) All completed application forms and required attachments must be submitted electronically to by on Friday 6 th February A signed original should be posted to: Local Energy Scotland Energy Saving Trust Ocean Point 1 94 Ocean Drive Edinburgh EH6 6JH Applicants to Phase 2 will be invited to give a 20 minute presentation of their application to the Challenge Fund panel. The date and location for the presentations will be communicated to the final Phase 2 applicants in February All responses to questions or requests for clarification on these guidelines will be published on the Local Energy Scotland website. How will Phase 2 applications be appraised? All applications for funding for the full phase are subject to appraisal and there is no guarantee that all full proposals will be funded. Page 17 of 20

18 Applications will be logged and an acknowledgement will be issued providing a unique reference number for your application within two days of the closing date. This reference number should be used in all communications with Local Energy Scotland about your application. All applications will be checked for validity. Only those that are considered to be valid will be fully assessed. For all valid applications, the applicants and each partner in any consortium will be subject to due diligence and must provide all financial information required to facilitate this test, including any additional information requested. Applications from any organisation failing the test (including failure to provide requested information within 1 month of the request), or involving a consortium that includes any organisation failing the test, will be ruled ineligible. All valid Phase 2 proposals will be appraised in relation to the Local Energy Challenge Fund objectives and specifically against the criteria in Box 1 below. The Challenge Fund is competitive. Box 1 Assessment criteria Phase 2 assessment criteria are currently being developed and will be circulated to all applicants that register their interest. The criteria may include: Relevance how well does it align with the objectives of the fund? Technical Feasibility how proven is the technology? Deliverability how likely is it that the project can be completed within the time available? We particularly welcome applications that are transformative and/or demonstrate new and innovative approaches. The assessment of proposals will be based only on the information which is explicitly contained within your application. You must not assume that Local Energy Scotland has any prior knowledge of your organisation or its work. Please note that the proposal appraisal process may include an assessment interview and due diligence activities. If a due diligence review is required, we will take into account the management and performance of previous projects funded by Scottish Government when making final decisions. When will decision on the award of Phase 2 grants be known? All applicants will receive notification of the outcome of the assessment of their full proposals. This is expected to be by 9 th March Please note that all decisions will be final and there is no appeals process. Details of all successful grants will be published on Local Energy Scotland s web site. If your application for Phase 2 funding is successful, you will receive a grant offer. This offer may be subject to conditions that need to be met prior to acceptance. The grant offer letter, including the terms and conditions of grant, form the agreement between your organisation and the Energy Saving Page 18 of 20

19 Trust (as the lead organisation in the Local Energy Scotland consortium the Energy Saving Trust will be the grant awarding body). You must sign the offer letter and return it to establish the agreement. Where bids are not successful, we will send you a letter informing you that your application has been unsuccessful, and indicating the reasons for this decision. All decisions made by the Energy Saving Trust, Scottish Government and the Challenge Fund Panel on funding are final. How will payments be made? Payments will be only made by Local Energy Scotland after an agreement has been signed between the applicant and Scottish Government. Further details on payments and financial requirements will be provided by Local Energy Scotland as part of any grant agreement. These will include the requirement for detailed statements of expenditure and requests for funds in the format that will be specified by Local Energy Scotland. Payments will be made on a milestone basis upon receipt of a detailed statement of expenditure. They will be subject to satisfactory progress against the project s work plan. Applicants must satisfy the due diligence, financial and organisational checks required prior to receiving public funds. Local Energy Scotland recognises the importance of remaining flexible and pragmatic throughout project implementation and will consider changes to ensure the most effective use of funds. Local Energy Scotland should approve changes to the overall impact and outcome of projects and any significant changes in outputs. Requesting a significant change may necessitate a re-examination of project purpose or implementation. Local Energy Scotland must approve any changes that require the movement of more than 10% of the total budget between budget lines. An updated work plan and budget may also be needed when requesting changes. Grant monies must be spent by 31 st March If circumstances outside the control of grantees occur which impact on delivering the expected outputs in the Phase 2 period, grantees must inform Local Energy Scotland as soon as possible. Local Energy Scotland will consult with Scottish Government to determine the best course of action. Funds should be claimed against evidence of expenditure usually in the form of a receipted invoice accompanied by evidence or copies of work undertaken. Should this not be possible, you may submit evidence of lack of funds and the payment can be made in advance. A claim form will be issued with your letter of offer. After each stage of work is completed you will be expected to complete and submit a claim form. Claims should be submitted to Local Energy Scotland for processing and will be processed within 21 working days of any claim being received by Local Energy Scotland. Finance is released against work carried out rather than a lump sum on approval. Reporting during Phase 2 Each grantee must maintain regular communication with their Local Energy Challenge Fund contact at Local Energy Scotland. Page 19 of 20

20 Grantees will undertake their own project monitoring with the support of Local Energy Scotland. They will be expected to provide reports on their project s progress. The narrative reporting will be as follows: A monthly narrative of progress (due by the 15 th of the following month) A monthly financial forecast and update of the project plan (due by the 15 th of the following month) A final financial and narrative report within 30 days of the end of the project. Local Energy Scotland, who manage the Local Energy Challenge Fund on behalf of the Scottish Government, will review all reports and will address any issues in these and contact grantees accordingly. They will be the first point of contact between grantees for any project reporting. Reporting beyond project completion It is expected that projects awarded a grant may be subject to future independent evaluation of their project as part of a wider Local Energy Challenge Fund evaluation. This may be carried out by a third party on behalf of Scottish Government and the grantees will be required to participate. Page 20 of 20

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