Ynni Cymru capital grant funding programme 2025 to 2026: guidance

These guidance notes are provided to assist in the completion of the Ynni Cymru capital grant application form 2025/2026. 

Please note that this document is intended to provide general guidance only and is not intended to have any legal effect. The legal basis on which grants will be offered and paid is set out in the conditions of grant. The specific conditions that will apply to any offer of grant will be as specified in the formal Grant Offer Letter if your application for funding is successful. 

The Welsh Government, through Ynni Cymru, is working to support the development and delivery of Smart Local Energy Systems (SLES) across Wales. A capital grant pot of up to £10 million is available to eligible organisations to deliver SLES projects across Wales. The Capital Grant Phase 2 scheme will be divided into two application pathways: 

• Pathway 1: simple SLES projects with tangible community benefits
• Pathway 2: larger, replicable or future-looking SLES

Funding is for capital works and cannot be used to cover costs incurred prior to the grant offer. 

Applications will be evaluated, on a competitive basis against other applications, by reference to the following criteria:

• Alignment with Ynni Cymru SLES principles and broader objectives
• Deliverability
• Benefits to the organisation, community, environment and any wider benefits
• Project costs, procurement and value for money

The deadline for applications is 5pm on the 16 June 2025 and projects must be completed by the 31 March 2026.

Objectives of Ynni Cymru 

The capital grant funding will support eligible organisations to deliver on Ynni Cymru objectives, which are: 

• To accelerate the transition and deployment of SLES across Wales.
• To expand locally owned renewable energy used and generated in Wales.
• To optimise the efficiency and effectiveness of locally owned renewable energy use and generation projects.  
• To facilitate a just transition to net zero, retaining the benefits for Welsh communities. 

Just transition

A Just Transition is about how we ensure we leave no-one behind as we move to a cleaner, stronger, fairer Wales.

In the context of Ynni Cymru, this means:

• Working with people across Wales to involve communities in decision making.
• Ensuring that our support is targeted towards communities that are most vulnerable to the transition to net zero.
  • Applying a 5% uplift to projects that pass the minimum threshold mark where the benefits are realised in high scoring areas of Index of Multiple Deprivation (IMD). Check your area here.
• Ensuring that the local community secures benefit, and retains the benefits, from renewable energy and sustainability projects.

Who can apply

The following organisations, who are headquartered or have an operating base in Wales, will be eligible to apply: 

Public Sector Bodies registered in Wales and as defined under the Public Contracts Regulations 2015 including, but not limited to:

• Local authorities
• Devolved government administrations
• Universities and colleges
• Schools
• Other public bodies as defined under the Public Contracts Regulations 2015

Community Organisations and Social Enterprises including, but not limited to

• Registered charities
• Charitable Incorporated Organisations
• Community Benefit Societies
• Community Interest Companies (CICs)
• Co-operatives and Community Benefit Societies
• Companies limited by guarantee or shares (non-profit distributing)
• Legally constituted voluntary organisations
• Faith-based organisations with a clear community benefit
• Other not-for-profit or mission-driven organisations

Legally constituted Small and Medium Enterprises (SMEs), that also employ people in Wales

Multiple applications are allowed, but each must cover a single SLES. Integrated systems combining multiple SLES units are permitted; please refer to section Smart Local Energy System (SLES) principles and Appendix 1 for further information on SLES. 

A maximum grant award of up to £999,999.99 can be awarded per organisation. There is also a maximum grant award limit of up to £999,999.99 per project (subject to pathway). 

Each application must include a specified level of match funding, as outlined in the table below:

Even though no match funding is required from community organisations and social enterprises it is encouraged to seek match funding, and this should be evidenced during the application process.

Other grants from the Welsh Government cannot be used as match funding, although Welsh Government loans are eligible. Match funding must be allocated to eligible costs directly supporting the SLES installation or function with projects being completed by 31 March 2026.

Specifically for public sector bodies, the Welsh Government Energy Service will be able to discuss and advise on how existing funding sources may be accessed and blended to any Ynni Cymru application. 

Specifically for limited companies, sole traders and partnerships (who have been trading for at least two years), the Development Bank of Wales can offer the Green Business Loan Scheme (GBLS) as match funding. The GBLS is designed to offer a package of support to enable Welsh businesses to tackle energy efficiency and support businesses on their journey to net zero.

If you would like to discuss the GBLS further, please contact Chris Dhenin directly ([email protected]). Further information on the GBLS is provided in Appendix 2: Funding Streams. 

Collaborative applications

Joint applications from eligible organisations are welcome and must be submitted by a lead applicant. In such cases, match funding requirements will be adjusted based on the capital expenditure (CAPEX) each partner is responsible for. The project application will be split by cost to partners, and the appropriate match funding will be applied accordingly. Any grant awarded will be made to the lead applicant. 

A total of £10 million in capital grant funding is available. To qualify, projects must meet the following criteria:

• Projects must have a certain level of miminum match funding:
  25% for public sector organisations, 10% for SMEs, and 0% community organisations and social enterprises.
   
• Projects should seek all other available grants and funding options before applying for the Ynni Cymru grant. Appendix 2: Funding Streams details possible funding streams.
   
• Projects must be completed and delivered by 31 March 2026.
   
• Funding pathways:
  • Pathway 1: £25,000 – £149,999 per project for simple SLES projects with tangible community benefits (must include renewable energy and low-carbon heating).
  • Pathway 2: £150,000 – £999,999.99 per project for larger, replicable or future-looking SLES.  
    Please refer to section Application pathways for further guidance.
     
• Priority will be given to proposals located in areas with a high Index of Multiple Deprivation (IMD), specifically those within the 20% most deprived areas according to the WIMD. Check your area here: WIMD - Data Cymru
   
• Please note that the amount of funding available is subject to subsidy control (please see the Additional information section in the guidance below).

A SLES joins up different energy generation, storage, demand, and infrastructure assets in a local area, making them operate more intelligently and deliver local benefits. 

• Smart: projects utilise data and controls to ensure that energy is used more efficiently and effectively, at the right place and at the right time (e.g. control systems and software for monitoring, automation, artificial intelligence, and/or trading energy).  
• Local: projects will be locally owned, they will recognise that different places and communities in Wales have different needs, and benefits will accrue locally (e.g. local ownership, carbon, financial and wider environmental and social benefits).
• Energy system: projects use multiple types of technology (e.g. a combination of local renewable energy generation to facilitate renewable power use, low carbon heating, cooling and hot water, ultra-low emission transportation, demand reduction, co-located renewable energy generation technologies, optimised use of grid capacity, and energy storage). 

Benefits of SLES

A Smart Local Energy System (SLES) enhances affordability by reducing energy bills and creating new revenue opportunities. It ensures security and predictability, providing a stable energy supply while improving resilience to fluctuations and disruptions. Additionally, SLES projects are expected to drive local economic growth, creating jobs, upskilling workers, and delivering wider community benefits.

Beyond energy efficiency, SLES projects also promote energy justice, making clean and affordable energy more accessible, particularly to vulnerable populations. Applicants should clearly demonstrate how their SLES project delivers local benefits, contributing to Ynni Cymru’s energy transition goals by enhancing affordability, security, resilience, job creation, and environmental impact—ensuring long-term value beyond the applicant’s organisation.

Benefits of a SLES System

Impacts: Energy supply & demand    
Benefits: Reduced energy demand and bills (from lower cost energy, energy efficiency & opportunities for demand-side response)

Impacts: Health & Wellbeing    
Benefits: Better indoor and outdoor air quality (which leads to better health outcomes & wellbeing)

Impacts: Electricity network considerations   
Benefits: Improved local energy resilience (via grid stabilisation & control)

Impacts: Electricity network considerations
Benefits: Grid and project level optimisation (through taking an integrated approach and targeted place-specific actions)

Impacts: Employment & Skills   
Benefits: Employment opportunities & Skills development

Impacts: Place-based  
Benefits: Utilising existing local resources and supply chains to meet community energy need

Impacts: Energy supply & demand    
Benefits: Reduced reliance on imported oil and gas (increased self-sufficiency & enhanced energy security)

Distribution benefits: Increased social equity; local ownership models

Impacts: Place-based   
Benefits: Regeneration of place and increased local revenue retaining benefits in communities

Process benefits: De-risk investments in SLES infrastructure

• Impacts: benefits attributable to the actual operation of the energy project
• Distribution: how benefits are distributed between stakeholders
• Process: establishing, operating, and managing a project

In line with the SLES principles and the examples in the Smart Local Energy System (SLES) principles section and Appendix 1, the technologies eligible for funding may include a combination of the following:

Pathway 1

Projects must include at least one generating technology and one low-carbon heating technology, with the option to include additional technologies. Smart systems are also required, see Appendix 3.

Pathway 2

Projects must incorporate at least two eligible technologies and the SLES must include renewable energy generation, with the option to include additional technologies. Smart systems are also required, see Appendix 3.

For both pathways, funding is not available for systems consisting solely of solar PV and battery storage.

Eligible technologies

Renewable energy generation technologies such as:

• Anaerobic digestion
• Hydro
• Solar Photovoltaics (PV) and solar thermal
• Wind 

Technology relating to low carbon heating, cooling, and hot water, such as:

• Heat pumps (any type)
• Solar thermal
• Heat networks

Ultra-low emission transportation infrastructure, such as:

• Electric Vehicle Charging Infrastructure (EVCI). 

Energy storage technologies such as:

• Battery storage
• Thermal storage
• Storage heating

Smart systems such as building management systems, smart lighting smart grid monitoring and smart meters.

Biomass heating systems, such as wood pellet boilers, may be eligible for funding where they are integrated into a wider SLES and demonstrate a clear decarbonisation benefit. Applicants must provide a full lifecycle carbon assessment, covering the biomass supply chain from harvesting and processing to transport and combustion, alongside calculations of emissions offset through regrowth. The source of the biomass must be specified, with a preference for locally sourced supply due to lower associated emissions. Given the release of particulates during combustion, applicants must also provide evidence of support from local planning and building control authorities.

Zero Emission Vehicle Charging Infrastructure (ZVCI) is eligible for funding if integrated into a SLES. 

Eligible costs are those directly associated with the delivery, installation, and commissioning of the funded low carbon technologies. These may include reasonable enabling works such as design, engineering, project management, installation, and commissioning costs. External consultancy and internal staff time linked specifically to these activities may also be eligible, provided costs are evidenced by appropriate documentation, such as invoices and timesheets.

Enabling Works

Only works directly required for the operation or installation of the system are eligible (e.g., minor structural works needed to mount equipment or connect systems). General building upgrades or unrelated preparatory works (e.g., rewiring an entire building or non-essential insulation upgrades) would not be eligible.

Insulation or Refurbishment

Energy efficiency improvements (such as insulation) are only eligible if they are an essential and integral part of the technology’s installation (e.g., adding insulation to ensure an air source heat pump performs effectively). Broader renovation or refurbishment projects are not eligible.

The following are examples of costs that will not be considered eligible for support:

• A single technology system.
• Internal revenue costs, such as those relating to staff costs for the operation/ maintenance of the SLES.
• Measures that do not result in or support carbon savings, examples include:
  • Any primary fossil fuel heating plant e.g. gas boilers, gas CHP
  • Replacement of existing low carbon heat systems still within its useful operating life.
• Costs relating to wider building renovations, such as refurbishment and significant building fabric works.  
• Retrospective work, which has already been started or completed before a Grant Offer Letter has been issued.
• Improvements that are required by law.
• Feasibility or concept work.
• Office related costs, including rental, utilities, office equipment.
• Travel or subsistence costs.
• Recoverable VAT - applicants will need to manage this cash flow aspect appropriately where VAT is paid in one financial year but recovered the next.
• Retention payments are unlikely to be eligible.
• Contingency costs, as any additional cost overrun should be managed by the applicant.
• Costs associated with writing the grant application (whether an internal or external cost).
• External Wall Insulation (EWI) due to the high upfront costs, its treated as a major fabric upgrade and considered refurbishment. Energy efficiency improvements (such as insulation) are only eligible if they are an essential and integral part of the SLES technology’s installation.
• Air conditioning used for solely for cooling

SLES systems must meet current industry standards to ensure compatibility with the grid and wider energy systems. Applicants should seek expert advice to ensure technologies integrate efficiently, operate reliably, and support future energy demands. 

All contractors and subcontractors must be certified installers of low carbon technologies, where appropriate. For technologies covered by the Microgeneration Certification Scheme (MCS), installers must be MCS certified. For technologies not covered by MCS, alternative relevant certifications must be provided—such as HETAS, Flexi-Orb, NAPIT, or NICEIC. Applicants will be required to supply certification numbers for all contractors and subcontractors delivering the works. 

Applicants must comply with data protection regulations and customer data security within the SLES framework.

Applicants installing renewable power generation and storage should consider using smart systems that can operate in "island mode" during a grid outage, ensuring continued energy supply. For example, solar PV panels can directly charge an associated battery using DC electricity. To enable island mode, a hybrid inverter is required, and several UK providers offer this feature. When selecting an inverter, factors like battery capacity, scalability, and compatibility with the solar setup should be considered. It is essential to consult with a certified designer and installer to ensure correct system operation, compliance with UK regulations and to obtain any necessary permissions from the Distribution Network Operator (DNO), local fire and rescue team and building control authority for systems operating in island mode. Excess solar energy is exported to the grid when the battery is full or there is no on-site demand. Including the ability to operate in island mode will be considered favourably in the assessment process.

Before you start 

Before submitting your application, it is the lead applicant’s responsibility to make sure:

• That all the information provided in the application is correct
• Your proposal meets the eligibility criteria as described in the section Project Requirements
• All sections of the application are marked as complete
• If submitting a collaborative application, that all partners are signatories to the application

How to apply 

The Ynni Cymru Capital Funding Application can be found at the following link: Ynni Cymru: capital grant funding programme 2025 to 2026 | GOV.WALES

Applicants can pause and save their progress at any time, allowing them to return and complete the application at a later date.

If an application is submitted in error, the applicant should email [email protected], including their name, organisation, and company number. They should also confirm that the submission was made by mistake and that they will be submitting a revised application.

After submission, applicants will have the opportunity to download a copy of their completed application.

Roles and collaborations 

Lead applicant

The lead applicant is responsible for managing the application process and subsequent reporting. This includes signing the Grant Offer Letter, making claims, and providing progress reports. The lead applicant serves as the primary point of contact and ensures that all aspects of the project align with the requirements and funding guidelines.

Authorising official

An authorising official is an individual with the appropriate authority to sign off on financial decisions for the organisation. Typically, this role is fulfilled by a financial director, Chief Financial Officer (CFO), or Section 151 officer (for local authorities). The authorising official’s signature confirms that all financial commitments are valid, and that the organisation has the capacity to manage the grant funds appropriately.

Collaborations

Partner organisations should be identified and detailed in the application form.

Application pathways

Please refer to section Smart Local Energy System (SLES) principles and Appendix 1 for further information on SLES.

The Capital Grant Phase 2 scheme will be divided into two application pathways:

• Pathway 1: Simple SLES projects with tangible community benefits
• Pathway 2: Larger replicable or future-looking SLES 

Pathway 1: Simple SLES projects with tangible community benefits

This pathway supports projects with costs between £25,000 and £149,999. These projects should establish or enhance a SLES within a local area. Most projects will focus on a single site or building, though multi-site projects may be considered if they function as part of a wider SLES.

Projects must include low-carbon heating and renewable generation and may also incorporate additional eligible technologies such as EV charging, and battery energy storage systems (BESS). The selected technologies must work effectively both individually and as part of an integrated system. To receive funding, all projects must be completed by 31st March 2026.

Pathway 2: Larger replicable or future-looking SLES 

For projects costing between £150,000 to £999,999.99, this pathway supports ambitious projects with strong potential for successful delivery and broader adoption. Eligible projects may include multi-site SLES installations with an overarching management system, large-scale single-site developments, or innovative demonstrations such as co-locating solar, wind, and BESS to optimise grid connections.

Eligible sites must align with SLES principles and demonstrate significant improvements in efficiency and effectiveness compared to standard practices. Projects are expected to engage multiple stakeholders and secure their buy-in. To optimise benefits, they will require a system such as a Distributed Energy Resource Management System (DERMS) or a Building Management System (BMS).

Proposals incorporating local supply or local energy market approaches are welcomed. 

Projects must provide clear benefits to stakeholders beyond the applicants and demonstrate how their insights and solutions can be applied to other communities, supporting broader adoption. Given the complexity of these initiatives, they may form part of wider, long-term schemes. However, all elements funded through this grant must be fully delivered by 31st March 2026.

This section outlines the essential criteria that projects must meet to be eligible for the grant. Applicants must provide evidence that their project meets the necessary standards, integrates multiple energy technologies, and supports the wider goals of the funding program. Each criterion detailed below will help assess the project’s potential to drive meaningful change and accelerate the transition to smarter local energy solutions.

Distribution Network Operator (DNO)

A Distribution Network Operator (DNO) is an organisation that takes care of part of the electrical grid. Projects will need to check with them that the electricity-generating and storage technologies to be installed can be connected to the grid. Projects must have initiated their DNO application process, or confirmed no upgrades are required with DNO, as part of the eligibility criteria in the application form or provide evidence that consent can be secured within the project timescale, if required for the project. Evidence provided can include the application form submitted to the DNO, an email confirmation, or proof of DNO connection (covering relevant generation and energy storage technologies).

In Wales, electricity networks are operated by SP Energy Networks (SPEN) and National Grid Electricity Distribution (NGED). Please refer to Appendix 4 to determine the relevant DNO for your area.

Planning permission

Planning permission may be required for the SLES project. Applicants must provide evidence that all necessary consents are either already in place or can be obtained within the project timeline, without impacting the delivery of the SLES. Proof of planning permission or permitted development can be obtained by submitting a pre-application to the local council or consulting a town planner. Further guidance can be found in Appendix 5.

It's advisable to consult your local council's planning department or website for documents and guidance specific to your area, as regulations and requirements can vary.

Design work / Structural surveys

Projects may need to conduct design work and structural surveys, particularly for roof-mounted solar PV systems, to ensure the feasibility and compliance of the installation. Projects must undertake appropriate design work and structural surveys to ensure compliance with planning and installation requirements prior to application or provide clear evidence that such consents can be secured within the project timetable for deliverability. Further guidance can be found in Appendix 6.

Loan funding and financial requirements

Projects must provide match funding as detailed in Table 2 Match Funding.
 

Match funding is to be provided as financial contributions. Other grants from the Welsh Government cannot be used as match funding, although Welsh Government loans are eligible (see Appendix 2: Funding streams for further information). Match funding must be allocated to eligible costs directly supporting the SLES installation or function which projects being completed by 31 March 2026. 

Lease of Building/Ownership

Applicants must provide appropriate evidence that they own, lease or have appropriate permission so that they can access and carry out works on the site(s) or building(s) the SLES system is proposed for. Lease agreements must be for at least 3 years from the date of the application.

Where a mortgage or other financial loan is secured on property that forms part of a proposed SLES, grant applicants should check with the financial company concerned regarding the acceptability of the proposed measures.

Insurance

Grant applicants should consult their property insurer to understand the requirements for insuring equipment that will be installed under the proposed SLES.

SLES System

As part of the eligibility section, you must demonstrate that your system is a multi-technology SLES project. 

The applicant should show that the system is a controlled system. This can be done by explaining how the individual components of the SLES incorporate smart controls that manage energy usage and storage efficiently, ensuring energy is used at the right time and place. Applicants should demonstrate how the system will deliver local benefits beyond the applicant organisation and how the system integrates multiple technologies that work together cohesively.
 

Procurement Approach

Procurement relating to your SLES project must be concluded (with proof submitted) before Grant Offer Letters are issued.

When using grant funding to procure works, goods, or services, it is essential to follow a transparent, fair, and cost-effective process. To support the local economy, applicants are encouraged to obtain at least one quote from a local supplier whenever feasible.

The procurement approach outlined below applies to SMEs, community organisations, social enterprises, and charities. Public sector bodies must adhere to public sector procurement regulations.

While these organisations are not formally bound by the Procurement Act 2023, all procurement using public funds is expected to follow the core principles of the Act—transparency, fairness, equal treatment, non-discrimination, and proportionality.

All procurement activity must be proportionate to the value, complexity, and risk of the contract and should ensure value for money and a clear audit trail.

Purchases and Contracts up to £4,999 (Goods, Services, or Works)

• At least one written quotation must be obtained and retained.
• Value for money must be demonstrated by ensuring goods, works, or services are of sufficient quality at a competitive price.
• A record must be kept justifying the decision for audit purposes.
• Applicants are encouraged to consider local suppliers and may need to provide evidence of efforts to source locally.
• Proportionality should guide the procurement effort in line with the contract value and complexity.

Purchases and Contracts from £5,000 to £24,999 (Goods, Services, or Works)

• A minimum of three written quotations must be sought from competitive sources (You can advertise on the National Procurement website, www.Sell2Wales.co.uk. This can help if you have difficulty identifying suppliers or would like to attract new suppliers to provide a quote. Advertising on Sell2Wales is best practice, however you may feel that you can already identify suppliers who could provide the best overall offer).
• Quotations must be based on identical specifications and assessed on an equal basis.
• The selection process must be documented, including quotes received, evaluation criteria, and final decision.
• Local suppliers should be considered, and applicants may be asked to demonstrate efforts to seek local quotes.

Purchases and Contracts from £25,000 to £74,999 (Goods, Services, or Works)

• A minimum of three written quotations must be sought from competitive sources based on:
  o    The same specification.
  o    The same evaluation criteria.
  o    The same time period for installation
  (You can advertise on the National Procurement website, www.Sell2Wales.co.uk. This can help if you have difficulty identifying suppliers or would like to attract new suppliers to provide a quote. Advertising on Sell2Wales is best practice, however you may feel that you can already identify suppliers who could provide the best overall offer)
• It is recommended to establish an evaluation panel.
• A record of all quotes, evaluation processes, and award decisions must be maintained for audit purposes.
• If only one quote is received, the applicant must contact the relevant project manager (e.g., Ynni Cymru or Welsh Government Energy Service) for guidance before proceeding. Further advertising via Sell2Wales may be required.

Purchases and Contracts from £75,000 up to £1,000,000 (Goods, Services, or Works)

• At least four tenders must be sought from competitive sources (You can advertise on the National Procurement website, www.Sell2Wales.co.uk. This can help if you have difficulty identifying suppliers or would like to attract new suppliers to provide a quote. Advertising on Sell2Wales is best practice, however you may feel that you can already identify suppliers who could provide the best overall offer).
• All bidders must receive the same specification, evaluation criteria, and submission deadline.
• The evaluation process must follow the original criteria, and a formal evaluation report must be produced.
• An evaluation panel is recommended to assess submissions.
• If only one tender is received, the applicant must contact the relevant project manager (e.g., Ynni Cymru or Welsh Government Energy Service) for guidance before proceeding. Further advertising via Sell2Wales may be required.

Clawback

If your organisation receives a grant, you may have to pay it back if:

• You stop trading.
• Your business changes significantly from what you stated in your application.
• You sell any items bought with the grant.
• The property or site with the funded is SLES is sold.
• Your business changes ownership.
• You move your business outside Wales or sell it.

Managing Conflicts of Interest

Applicants must ensure procurement is conducted fairly and without bias. If a relative, business partner, or friend wishes to submit a quote, the process must remain open and transparent. Any conflicts of interest must be declared in the application, and individuals with an interest must not participate in the evaluation process.

Ethical Supply Chains

In recent years concerns have been highlighted around the sourcing of solar silicon and other materials used in solar panels and other ‘green’ goods. This included the mining of ore and processing using of forced labour in some countries.  By extension such concerns are also applicable to other ‘green’ product supply chains – e.g. wind turbine components and battery energy storage systems.

Welsh Government operate a Code of Practice for Ethical Employment in Supply Chains to encourage organisations to consider the development of more ethical supply chains when delivering contracts and projects. The Code covers the following employment issues:

• Modern Slavery and Human rights abuses
• Blacklisting
• False self-employment
• Unfair use of umbrella schemes and zero hours contracts
• Paying the Living Wage

Applicants should be demonstrating their compliance, and that of their contractors, subcontractors, and suppliers, to the Welsh Government Code of Practice.

Value Added Tax (VAT)

Applicants are strongly encouraged to seek professional advice regarding VAT, as eligibility for relief can be complex and specific to each organisation.

VAT is a consumption tax added to most goods and services in the UK, collected by businesses on behalf of HMRC. When applying for the Ynni Cymru grant, applicants must accurately state the VAT amount and confirm they are charged correctly by contractors and suppliers. See table 3 below.

VAT registered organisations - If the organisation is VAT registered, they will only be allowed to claim for the net value. Therefore, VAT registered organisations must have sufficient funds to cover the VAT cost for the work. 

Non-VAT registered organisations - If the organisation is not VAT registered, then you can claim the full cost including VAT from Ynni Cymru but would not be able to claim back the VAT from HMRC.

Charities, SMEs, and public sector organisations may qualify for VAT relief or reduced rates—refer to HMRC guidance here. The VAT treatment for solar panels, heat pumps, and battery storage depends on the organisation type and building use.

In Wales, a zero-rate VAT applies to energy-saving materials installed in buildings used solely for charitable purposes or certain residential properties. However, this does not apply if the building is used for commercial activities, such as renting spaces for events.

To qualify for Zero-Rate VAT:

• The building must be used exclusively for charitable purposes.
• The installation must meet the definition of energy-saving materials according to VAT rules.

Quantitative and Qualitative Benefits

Demonstrating the benefits of your SLES is key to a strong application (see benefits of SLES section above). Where possible, applicants should quantify their current energy demands and projected post-project demands. These figures may be estimates at the time of application.

Applicants can use drop-in sessions or contact the Ynni Cymru team for advice.

For EV charger integration, applicants must ensure fair, transparent pricing, including clear structures, measures to prevent excessive charges, and market rate alignment. They should also demonstrate benefits like improved accessibility, cost savings, or enhanced energy resilience. Lack of evidence on fair pricing may impact the assessment.

Beyond energy savings, SLES projects should contribute to the ‘Local’ aspect of the system through benefits, which can include:

• Community Impact: Encourages local ownership, raises sustainability awareness, strengthens community bonds, and demonstrates local support.
• Environmental Benefits: Carbon reduction, improved air quality, supporting biodiversity through land restoration and habitat creation.
• Innovation & Research: Drives new energy solutions, serves as a model for future smart energy projects, and fosters research partnerships.

Application and selection process overview 

• Step 1 – Opening of capital grant: 2 May 2025
• Step 2 - Closing date for submission of applications: 5pm on 16 June 2025
• Step 3 - Applications will be checked to ensure that they are compliant, complete, and that relevant supporting documentation is attached.
• Step 4 - Compliant applications will be evaluated on a competitive basis against the scoring criteria outlined below.
• Step 5 - Successful applicants will receive a Grant Offer Letter (GOL) setting out the maximum grant offer, period of award, grant conditions, and payment schedules.
• Step 6 - The grant must be fully claimed by the expiry date stated in the GOL using the appropriate claims process and accompanied by any required supporting documentation as specified in the GOL. Specific claim rules will be shared with successful applicants.

• This guidance note provides general guidance but holds no legal status.
• Any advice/assistance provided by Ynni Cymru is provided on a no-liability basis.
• Neither Ynni Cymru nor the Welsh Government will have any liability to you for any loss, damage, costs, expenses or other liability arising out of or in connection with the provision of any advice or assistance of this kind and/or any reliance placed by you on that advice or assistance.
• Funding is awarded via a competitive process. The funding available is limited and there is no guarantee of funding award to any organisation.
• All awards are discretionary and there is no appeals process.
• As a public sector funding provider this fund should not undertake any activity which displaces or distorts existing market provision. Focus will be upon investments that either cannot access or have difficulty in accessing other forms of more conventional investment.
• Applications will be considered in the context of other available Welsh Government funding, and applicants may be directed towards alternative or mixed funding as appropriate.
• Ynni Cymru and the Welsh Government do not support certain activities that are likely to give rise to controversy about appropriate use of public funds and therefore will not fund any organisation or activity which, in our opinion, could bring Ynni Cymru or the Welsh Government into disrepute.
• Awards will be made under registered UK subsidy scheme SC11250
  ‘Subsidy Scheme for Local Energy Support (Wales)’ in line with the UK Subsidy Control Act (2022). Please be aware details of each award will be published on the UK Subsidy Transparency Database in line with Welsh Government’s subsidy control commitments.
• Activities which have already commenced are considered out of scope for this grant.
• If you are unsure about any provisions in the conditions of grant or the declaration that you are required to make at the end of the application form you should seek independent legal advice.

We are committed to ensuring that our application process is accessible so please contact us directly if you would like to request reasonable adjustments: [email protected].

As part of Grant Phase 2, Ynni Cymru is collaborating with Business Wales to support third-sector organisations throughout the application and procurement process.

Ambition North Wales have guidance through their website. Guidance is available for:

1. Project Outline & Feasibility – Helps you assess your project idea’s feasibility and develop a clear outline.
2. Developing a Funding Application – Provides key insights into structuring a strong funding application.

Ynni Cymru also provides tools and services to assist applicants, including:

1. Wales Energy Storage Tool (WEST) – Illustrates potential annual revenue models for battery storage use.
2. Drop-in Sessions – Applicants can join scheduled calls with the Ynni Cymru teams for Q&A. Sign up here: Ynni Cymru - Local Partnerships

ASHP (Air Source Heat Pump)    

A heating system that extracts heat from the air to provide energy-efficient heating.

ASC (Agreed Supply Capacity)    

The maximum amount of electricity a site can draw from the grid, affecting standing charges.

BESS (Battery Energy Storage System)    

A system that stores excess electricity for later use, improving energy efficiency and resilience.

BMS (Building Management System)    

A control system that monitors and manages building energy use, improving efficiency.

Community Benefit    

The social, economic, or environmental advantages a project brings to a local area.

DER (Distributed Energy Resources)    

Decentralised energy sources such as solar panels, wind turbines, and battery storage systems.

DERMS (Distributed Energy Resource Management System)    

A system for managing multiple energy sources, optimising efficiency and grid stability.

DC (Direct Current)    

A type of electricity flow used in renewable energy systems, such as solar PV and battery storage.

DNO (Distribution Network Operator)    

A company responsible for operating and maintaining the regional electricity distribution network.

Distribution Connection and Use of System Agreement (DCUSA)   

A multi-party contract that sets out the terms for using and connecting to the electricity distribution network in Great Britain. It standardises the commercial arrangements between distribution network operators (DNOs), suppliers, and other users to ensure fair access and efficient operation of the network.

EV (Electric Vehicle)    

A vehicle powered by electricity rather than fossil fuels, reducing carbon emissions.

EVCP (Electric Vehicle Charge Point)    

A charging station for electric vehicles, integrated into a smart energy system.

Feasibility Study    

An assessment of the technical, financial, and environmental viability of a project.

Goods    

Physical items that are bought and sold. In the context of procurement, goods refer to tangible products that are purchased by an organisation for use in its operations.

Grant Offer Letter (GOL)    

A formal document issued to successful applicants, detailing funding terms and conditions.

Match Funding    

A requirement for applicants to contribute their own funds or secure additional funding from other sources.

Net Zero    

A target to balance carbon emissions with carbon removal, aiming to reduce the overall carbon footprint of a project.

PPA (Power Purchase Agreement)    

A contract between an energy producer and a buyer, specifying terms for selling generated electricity.

Procurement Process    

The structured approach to acquiring goods and services in compliance with funding regulations.

SEG (Smart Export Guarantee)    

A UK Government scheme that allows small-scale energy producers to sell surplus electricity to the grid.

Services    

Intangible tasks or activities provided by one party to another in exchange for compensation. Examples include consulting or legal advice

SLES (Smart Local Energy System)    

A network of locally integrated energy solutions, including renewable generation, storage, and demand management.

TCR (Targeted Charging Review)    

A regulatory review by Ofgem affecting electricity network charging structures, particularly for sites with intermittent demand.

WEST (Wales Energy Storage Tool)    

A tool developed by Ynni Cymru to model battery storage revenue and optimise project economics.

WIMD (Welsh Index of Multiple Deprivation)    

The Welsh Index of Multiple Deprivation (WIMD) is designed to identify the small areas of Wales that are the most deprived.

Works    

Refers to construction, building, or civil engineering projects, including tasks like infrastructure development, repairs, refurbishments, and installations. This can involve physical changes to land, buildings, or structures. 

Simple SLES System

A simple SLES integrates key technologies such as low carbon heating, solar panels, battery storage, and smart controls to optimise local energy use. An application for this SLES would form part of the Pathway 1 grant fund. By storing excess power for later use, it reduces waste, lowers costs, and improves sustainability. Smart lighting and heating controls may also be included, using automation and data analytics to ensure efficient energy use.

For example, a building such as an office, community centre, or leisure centre could install solar photovoltaic (PV) panels, battery storage, an air source heat pump (ASHP), and smart meters. This setup maximises onsite self-consumption and reduces carbon emissions.

A Community Centre might integrate:

• Rooftop Solar PV for renewable energy generation
• Battery Energy Storage System (BESS) to store excess power
• Air Source Heat Pump (ASHP) for efficient heating
• Solar hot water diverter to enhance hot water supply
• Battery Electric Vehicle (EV) charge points for sustainable transport

These technologies work together through smart controls, ensuring energy is used optimally. During peak generation months, the building may run entirely on solar energy during daylight hours. When demand is met and the battery is full, the system automatically exports surplus energy to the grid, generating revenue through Power Purchase Agreements (PPA) or Smart Export Guarantee (SEG) payments.

Medium Complexity SLES

A medium-complexity SLES integrates multiple distributed energy sources—such as solar PV, wind, heat pumps, and battery storage—alongside intelligent energy management and demand-response capabilities. This allows various components, including EV chargers, heating systems, and appliances, to optimise energy use based on supply and demand. This type of SLES project would be part of the Pathway 1 and 2 grant fund route.

A practical example involves a group of SME businesses collaborating with a community energy organisation to install rooftop solar PV, Battery Energy Storage Systems (BESS), Air Source Heat Pumps (ASHP), solar hot water diverters, and EV charge points across a small business park. The community energy organisation leads the project, owning, managing, and maintaining the systems, including rooftop leasing arrangements for solar PV, while selling solar-generated and stored electricity to SMEs via a private wire Power Purchase Agreement (PPA) at rates lower than the grid.

The system operates intelligently, prioritising onsite energy consumption to reduce carbon emissions and energy costs. When demand is met and batteries are full, excess renewable electricity is exported to the grid under an export PPA, with potential participation in BESS revenue markets. Additionally, solar and battery systems provide backup power during grid outages. Any financial savings and revenues generated are reinvested into further community projects, enhancing local energy resilience and sustainability.

Complex SLES System

A complex SLES is a fully integrated and highly intelligent system that incorporates multiple energy vectors (electricity, heat, transport) with advanced automation, AI-driven optimisation, and grid interaction. It can dynamically optimise and balance energy use across buildings, industries, and communities, offering demand-side flexibility and potentially supporting peer-to-peer energy trading. This type of SLES project would be part of the Pathway 2 grant fund route.

An example could be where a Community Interest Company (CIC) installs rooftop solar PV and BESS to diverse local properties (homes, public buildings, SMEs, farms), constructs a solar farm, wind turbine and hydro generator and creates a Virtual Power Plant (VPP) system, digitally linking and aggregating all these distributed energy resources (DER) into a single, centrally managed network. These resources are controlled and optimised to act as a unified, virtual energy system that can operate much like a conventional power plant. The VPP enhances the integration of renewable energy and provides more flexibility in meeting energy demands, offering benefits like cleaner and more affordable power.

The availability of lower cost local renewable electricity incentivises the roll out of technologies such as heat pumps, battery EV charging and green hydrogen electrolysis, hydrogen fuelled transport and blended hydrogen injection into the local gas grid. A Local Energy Market (LEM) is created where customers receive cheaper electricity when the systems are generating power. Revenue flows to the CIC. The CIC supports and maintains the systems. An automated AI driven Distributed Energy Resource Management System (DERMS) sends energy where it needs to go at the right time and manages grid interactions. The DERMS can also intelligently export energy to grid for payment or engage in battery revenue / flexibility markets.

The list of relevant funding programmes in Wales 2025/2026 detailed below is not exhaustive but provides some detail of available funding programmes. Additional sources of funding are available, and finance locators such as those provided by Business Wales may be helpful for applicants: Finance locator | Business Wales 

Boiler Upgrade Scheme 
Through the Boiler Upgrade Scheme, grants are available to cover part of the cost of replacing fossil fuel heating systems with a heat pump or biomass boiler.
Eligibility: Applicant must own the property you’re applying for (including if it’s a business, a second home, or a property you rent out to tenants), and be replacing fossil fuel heating systems - such as oil, gas, electric or LPG (liquefied petroleum gas). 

Clean Energy Fund
A £25 million initiative delivered via loans and grants, designed to support clean energy projects across North Wales, aiming to achieve renewable energy and decarbonisation targets with local ownership elements.
Eligibility: There will be £5 million targeted at the voluntary sector and £15 million for the private sector across North Wales. 

Digarbon 
DiGarbon provides loan funding to help drive the tertiary education sector to achieve net zero emissions.
Eligibility: Public further and higher education institutions based in Wales are eligible to apply.

Green Business Loan Scheme
The Development Bank of Wales provides Welsh businesses with a package of support, including green business loans, to support reduction of carbon emissions and allow businesses to save on future energy bills.
Eligibility: To apply for the Green Business Loan Scheme, limited companies, sole traders or partnerships must be based in Wales and trading for at least two years with at least one set of filed, annual accounts.

Low Carbon Heat Grant 
Welsh Government Grant
The grant is intended for capital works associated with retrofitting low carbon heat solutions in non-domestic, local authority-owned buildings.
Eligibility: Local Authorities based in Wales can apply.

Smart Export Guarantee (SEG) 
The SEG allows applicants to receive payments for surplus electricity generated by their solar panels and exported back to the grid. While not a grant, it provides an ongoing revenue stream that can offset installation costs.
Eligibility: Applicants will need a certified energy generation system and an export/smart meter to apply.

Sport Wales Energy Saving Grant
The Energy Saving Grant is a capital funding grant which offers an opportunity for sports clubs to make energy-saving improvements. 
Eligibility: Applications are invited from National Governing Bodies (NGB), Local Authorities, Sports Partnerships or Sport Wales-funded National Partners.

The Local Energy Fund
The Development Bank of Wales provide loans to support to small renewable energy projects unable to access commercial funding.
Eligibility: Community groups, social enterprises, local ownership models, and SMEs can apply.

Wales Council for Voluntary Action (WCVA) Energy Efficiency Scheme
The Energy Efficiency Scheme is helping voluntary organisations improve the energy efficiency of their properties by providing advice, finance and expertise. Grants of up to £1,000 towards an energy survey at your property, grants of up to £25,000 towards a maximum of 80% of the cost of undertaking the identified work, and loans to cover any remaining costs of installation are available.
Eligibility: Voluntary organisations based in Wales, with an annual energy bill of at least £10,000 per annum.

Wales Funding Programme - Salix 
The scheme provides loan funding for energy efficiency and decarbonisation projects for public sector bodies registered in Wales.  
Eligibility: The scheme, funded by Welsh Government, is targeted at public sector organisations in Wales including local authorities, schools, universities, colleges and emergency services. 

Smart Systems

Smart systems must interact and influence each other’s operation beyond co-location. This typically involves directing energy flows (e.g. on-site renewables directing charging storage or supplying heat pumps before exporting, and/or coordinated operation managed by a control system).

Smart lighting is expected to be an advanced lighting system and a demand reduction measure using ultra efficient lighting (LED technology as a minimum) with smart automated lighting control features such as passive infrared motion sensor control, automatic daylight dimming, remotely addressable controlled scheduling, dimming and switching to allow customised lux levels for different activities and tasks via for example smartphone app or Building Management System (BMS).  

All new lighting should be professionally designed and consider the appropriate recognised industry standards for lux level, uniformity, and glare appropriate to the task. Exterior lighting should consider Guidance Note 08/23: Bats and Artificial Lighting at Night which has a key requirement for downward directional luminaires, with warm white colour temperatures (ideally 1700K ‘amber’ and max 3000K ‘warm white’). 

This capital funding is intended for the creation of a SLES and therefore the cost for the inclusion of smart lighting is expected to be reasonable and proportionate to the SLES project. We would not expect smart lighting to represent any more than 10% of the total project costs. Unreasonable costs for smart lighting will be deemed an ineligible wider routine maintenance renovation – see Ineligible costs ‘Costs relating to wider building renovations, such as refurbishment and significant building fabric works.

Anglesey: SP Energy Networks
Blaenau Gwent: National Grid Electricity Distribution
Bridgend: National Grid Electricity Distribution
Caerphilly: National Grid Electricity Distribution
Cardiff: National Grid Electricity Distribution
Carmarthenshire: National Grid Electricity Distribution
Ceredigion: SP Energy Networks
Conwy: SP Energy Networks
Denbighshire: SP Energy Networks
Flintshire: SP Energy Networks
Gwynedd: SP Energy Networks
Merthyr Tydfil: National Grid Electricity Distribution
Monmouthshire: National Grid Electricity Distribution
Neath Port Talbot: National Grid Electricity Distribution
Newport: National Grid Electricity Distribution
Pembrokeshire: National Grid Electricity Distribution
Powys: SP Energy Networks / National Grid Electricity Distribution
Rhondda Cynon Taf: National Grid Electricity Distribution
Swansea: National Grid Electricity Distribution
Torfaen: National Grid Electricity Distribution
Vale of Glamorgan: National Grid Electricity Distribution
Wrexham: SP Energy Networks

Permitted Development Solar Panels

For solar panels on non-domestic properties, the following conditions should be met, as a minimum, to qualify as permitted development:

• The panels must not protrude more than 200mm from the roof slope or surface.
• In conservation areas or World Heritage Sites, solar PV or solar thermal equipment cannot be installed on a wall facing a highway.
• Special restrictions apply in conservation areas, National Parks, and Areas of Outstanding Natural Beauty (AONB), and planning permission may be required even if the panels meet other permitted development criteria.
• The installation must not significantly impact the building’s appearance or the surrounding environment.

Planning Permission required if:

• The property is a Listed Building or located in a sensitive area, such as a conservation area, National Park, or AONB.
• The proposed installation exceeds height or size limitations or significantly alters the building’s appearance.

Permitted Development Air Source Heat Pumps (ASHP)

To qualify as permitted development, ASHP should comply, at a minimum, with the following conditions:

• The outdoor compressor unit (including housing) must not exceed 0.6 cubic metres in volume.
• Only the first installation of an ASHP qualifies as permitted development, provided no wind turbine exists on the property.
• All parts of the ASHP must be at least one metre from the property boundary.
• Installations on pitched roofs do not qualify as permitted development. If installed on a flat roof, all parts of the heat pump must be at least one metre from the roof’s external edge.

Planning Permission required if:

• The installation is within the curtilage of a Listed Building or a Scheduled Monument site (permitted development rights do not apply).

It's advisable to consult your local council's planning department or website for documents and guidance specific to your area, as regulations and requirements can vary.

Depending on the nature of the project, the following assessments may be necessary. Please note that this is general advice, and we strongly recommend consulting with relevant professionals to confirm the appropriate actions for any of the below.

Structural Surveys

• Roof-mounted Solar Panels – A structural survey may be required to assess whether the roof can support the weight and wind loading of solar panels. Older buildings or those with existing structural concerns are more likely to require a survey.
• ASHP – If the heat pump is installed on a flat roof, an assessment may be needed to ensure the structure can support the additional weight and vibration.
  Ecological & Environmental Surveys.
• Bat Survey – Required if the project involves modifications to a roof, loft space, or an old building where bats could be roosting. Bats are a protected species, and a survey may be needed before planning permission is granted.
• Bird or Wildlife Survey – Necessary if the project affects trees, hedgerows, or buildings where protected bird species (e.g., barn owls) may nest.

Noise Impact Assessment

• ASHP – In some cases, a noise impact assessment may be required, especially in residential areas, to ensure compliance with permitted development noise limits

Ground Investigations

• Ground-mounted Solar Arrays – If installing solar panels on land, a ground condition survey may be needed to assess soil stability, drainage, and potential ecological impacts.
• Foundation Assessments – Required for battery storage or large infrastructure installations to ensure ground stability.