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MMN May 2024 – Funding for Business Energy Efficiency

9 May 2024

Electricity use accounted for around 3% of the average dairy farmers costs in Scotland in the 2022/23 Scottish Farm Business Survey (and was 4.32% of fixed costs). As such, improving the energy efficiency of your buildings and equipment is important to future proof your business.

SME Loan Scheme

Business Energy Scotland have launched a new Small Medium Enterprise (SME) loan scheme to fund improvements in energy efficiency. A SME is defined as a business with a turnover of less than £42 million and a balance sheet total not exceeding £36 million and less than 250 employees. As such, most dairy farms in Scotland are classed as an SME. The loan has a lower limit of £1,000 and an upper limit of £100,000 and includes a cashback component of no more than £30,000. This means that some of the cost of the measure you apply for is refunded to you, with the remaining loan amount to be paid back within eight years at 0% APR.

What is eligible?

On the Business Energy Scotland website there is an extensive list of eligible measures, but it is not exhaustive. Options listed that are of particular interest to dairy farmers are as follows:

  • Heating, ventilation and air conditioning – cooling system replacement/upgrade, ventilation systems and building control systems.
  • Renewables – wind turbines, small scale hydro, solar panels, biomass and anaerobic digestors.
  • Other equipment – measuring, monitoring and control equipment, lighting systems, fitting and controls and air compressors.

Any measure which reduces your carbon footprint through increasing your energy efficiency is potentially eligible and measures not on the list are considered on a case-by-case basis. When considering whether a measure would potentially be eligible for funding you should consider whether it meets one of the following criteria:

  1. Reduces energy usage.
  2. Increases efficiency of energy usage.
  3. Transitions energy use to a greener energy source.

There is also an extensive list of case studies available on the website showing examples of what measures other businesses have applied for.

Measures that result in no carbon savings, or result in carbon increases, are ineligible for funding. If the technology you wish to install has a payback of more than 20 years, it will not be eligible for funding.

How do I apply?

To apply for funding from the SME Loan Scheme, you need a report from Business Energy Scotland that recommends the energy efficient systems, equipment and/or building fabric improvements that you would like to use the funding to install.

Business Energy Scotland’s reports are free and it typically takes between 2 to 6 weeks to prepare your report, depending on the complexity of your requirements. Once the application is submitted to the fund administrators, providing they have all the information they require, they aim to make a decision within ten working days.

How does the cashback work?

Cashback is awarded based on the total value of eligible measures applied for within your loan application.

The cashback grant funding can be awarded as per below:

  • 75% of eligible costs up to a maximum of £20,000 can be claimed by the qualifying applicant for energy efficiency measures (see list of measures on page 8 of the application form).
  • 75% of eligible costs up to a maximum of £10,000 can be claimed by the qualifying applicant for air/ground/water source heat pumps, biomass boilers, or solar thermal renewable technologies.

A maximum of £30,000 cashback can be awarded to a single business for eligible technologies and across all their SME applications (previous or current).

Further information

For further information on the scheme please visit the Business Energy Scotland website available at or alternatively contact Business Energy Scotland on 0808 808 2268.; 01292 525010


Row of solar panels in a field in front of farm sheds

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