As before, the challenge fund forms part of the Low Carbon Investment Fund (LCIF).
Projects whose ultimate object is deep geothermal energy exploitation in England, Scotland, Wales and Northern Ireland are eligible to bid to the fund. DECC will establish a panel to judge the bids received by the closing date against the same criteria used for the first round:
- credibility and experience of bidding team;
- scale of plant. Projects will be expected to be commensurate with electricity generation at a scale of 2 MWe or greater, or heat generation at 5 MWth or more within 5 years, as reflected in their business plans. Note that the phase of the project for which grant funding is being sought need not achieve heat or power production;
- robust business plan in place, including plausible assumptions on power and heat outputs of the project in the medium and longer term;
- evidence of high quality desk-top geological analysis;
- evidence of robust financial planning, and financial due diligence carried out to a high standard;
- potential for the project to contribute to the long term development of the UK deep geothermal sector; and
- plausible plans to spend funds within the deadlines.
The intention behind the Challenge Fund is to help develop the potential of a deep geothermal sector in the UK, and the panel will be guided by that principle. However there will be no limit in bid size other than the size of the fund i.e. bids up to £1 million will be accepted.
Projects may bid for funding in both rounds of the challenge fund.
As announced, the grants will be for capital spend under Government accounting rules; the Treasury's Consolidated budgeting guidance from 2008-09 provides guidance on what constitutes capital spend, with the section on capital spending beginning at p.71. DECC officials (see contact address below) will be happy to advise on what falls within the definition of capital spend.
Interested projects are invited to bid to the Challenge Fund for grants, setting out evidence that their project is aligned with the criteria set out above.
DECC is aware that capital spending proposals within some projects will be dependent on achieving planning permission. Bids may be submitted on a provisional basis, and may be successful, on the condition that release of funds may be dependent on the significant progress through the planning process having been achieved.
Successful bidders will be informed of the size of their grant, which will be released to them when receipts are presented demonstrating capital expenditure within the time-frame of the funding round.
Funding will be provided under section 5 of the Science and Technology Act 1965 and will be subject to state aid rules: in particular, that grants are either:
- not state aid; or
- state aid which is permitted under the De Minimis Regulation or, until 31 December 2010, the temporary scheme for small amounts of compatible aid; or
- state aid which is in accordance with Article 23 (environmental investment aid for the promotion of energy from renewable energy sources) or Article 31 (aid for research and development projects) of the General Block Exemption Regulation (“GBER”).
For grants under articles 23 or 31 of the GBER:
- a maximum aid amount of EUR 7.5 million applies
- maximum aid intensities apply as specified in those articles, with increased aid intensities applicable to SMEs as defined in Annex 1 to the GBER
- restrictions apply to the cumulation of aid, as specified in article 7 of the GBER; and
- grants must be for eligible costs as defined in article 23(3) or article 31(5) (read together with article 4) of the GBER.
The text of the GBER can be viewed on the European Commission: Block Exemption Regulations web page and an overview of the objectives of the GBER, applicable from 29 August 2008 until 31 December 2013, is also available.
The timetable for the second round of the challenge fund will be as follows:
- Wednesday 15 September 2010: publish agreed criteria for bidders;
- Friday 29 October 2010: deadline for bids;
- Mid-late November 2010: announce successful bidders to second round.
Bidders should send their bids to:
Distributed Energy and Heat Team, Area 1E,
Department of Energy and Climate Change,
3 Whitehall Place,
London SW1A 2AW
Bids by email are welcome to Michael.Feliks@decc.gsi.gov.uk.