A special £35 million 'Energy Entrepreneurs Fund' has been set up which will allow SMEs to apply for up to £1m each in order to develop their ideas. Initially "a panel of investors" will choose to support businesses that come up with innovations on "energy efficient technologies", the Department for Energy and Climate Change (DECC) said in a statement.
The panel will later provide £15m from the funding pot to businesses looking to develop initiatives on "power generation", it said.
"Part of the way that we're going to tackle climate change and get clean energy is through innovation, particularly with SMEs," Energy Secretary Ed Davey said.
“We’re allocating a fund of thirty-five million pounds which will help innovators and entrepreneurs develop and demonstrate low carbon technologies. The first wave is going to be in energy efficiency in buildings, things like advanced lighting, heat pumps, ventilation technologies and so on. This is a practical way that we can make sure we get to the low carbon economy," he said.
DECC said successful applicants for the funding could use the money as "leverage" to obtain additional money to back the development of their products from private sector investors.
The Government has also appointed two 'fund managers' charged with investing an initial £80m in small-scale waste infrastructure projects, according to a report by Infrastructure Journal.
"With global demand forecast to increase by more than 40 per cent in the next two decades, we urgently need a more diverse, cleaner mix of energy sources that will give us energy security without causing irreparable damage to the planet," Prime Minister David Cameron said in a statement. "Renewables are now the fastest growing energy source on the planet. And I am proud that Britain has played a leading role at the forefront of this green energy revolution."
"Britain has gone from virtually no capacity for renewables, to seeing them provide almost 10 per cent of our total electricity needs last year. And we’ve added more capacity for renewables in the last two years than at any time in the last decade. Our commitment and investment in renewable energy has helped to make renewable energy possible. Now we have a different challenge. We need to make it financially sustainable," he said.
Earlier this month the Renewable Energy Association (REA) said that the UK could displace fossil fuel consumption up to the value of £60 billion by 2020 if it meets its European commitment to achieve 15% of its energy consumption from renewable sources by 2020. However, it said that without Government action most of this money will have to be used to purchase imported gas, oil and coal to meet the country's 'energy gap'.