Capital Funding

Following project development funding from the Heat Network Support Unit (HNSU), a heat network project may be capital ready. The Scottish Government has made £300 million available through Scotland’s Heat Network Fund to support the roll out of heat network projects across Scotland.

LHEES leads into Heat Network Support that leads into Heat Network Fund

Scotland’s Heat Network Fund

For capital-ready projects, the £300 million Scotland’s Heat Network Fund offers capital grant funding (up to 50% of the total eligible capital costs). It supports the roll out of new zero emission heat networks and communal heating systems, as well as the expansion and decarbonisation of existing heat networks across Scotland.

Commercialisation support is also available for up to 10% of the total capital cost to a maximum of £1 million, subject to budget availability. Enabling support (for work such as project management and consultancy) is available for up to 10% of the total capital cost up to a maximum of £100,000. Projects requiring additional commercialisation and enabling support will be required to submit a request providing detailed information on why additional funding is required.

The Fund supports both networks suited to urban environments as well as small, rural and community-led heat networks and communal systems. Both public and private sector organisations can apply. Scotland’s Heat Network Fund will remain open to applications over the course of the parliamentary session and grant funding must be fully drawn down by March 2026. Funding will be awarded on a competitive basis against the funds criteria and will be available until the total fund value has been reached. Projects can be commissioned after March 2026 if the commissioning date is agreed with the SHNF team.

For further information or guidance on applying to Scotland’s Heat Network Fund, please contact the team at

Additional Capital Support

Funding is also available through the District Heating Loan Fund, managed by the Energy Saving Trust. The fund provides capital loan funding of £1 million plus to organisations in Scotland to use renewables technologies to build out heat networks. The fund is available to medium to low-risk Scottish companies (or Scottish subsidiary companies). Loans can fund up to 100% of eligible costs or be match-funded with capital grants. Technical advice and support are also provided in addition to funding.

Social Housing Net Zero Heat Fund – Scottish Government are making £200 million available over the next five years to support social landlords across Scotland to install zero emissions heating systems and energy efficiency measures across their existing stock.

Community and Renewable Energy Scheme (CARES) – Supporting the development of community engagement and ownership or co-ownership of small heat networks where these are appropriate with a tailored package of support, handholding and advice, through our Community and Renewable Energy Scheme (CARES), delivered by Local Energy Scotland. For individual property owners wanting to connect to a nearby heat network, interest free and low-cost loans are available from both Home Energy Scotland and the Energy Efficiency Business Support Service, subject to eligibility. Support is also available through the Community and Renewable Energy Scheme for community buildings to connect to a nearby heat network.