A new £500,000 fund has been established to help farmers, land managers and small to medium-sized businesses in rural areas develop sustainable energy schemes.

The Rural Energy Challenge Fund is available through the Scottish Government’s Community and Renewable Energy Scheme (Cares).

Set up in 2011, Cares provides loans towards the high-risk, pre-planning consent stages of renewable energy projects.

Government said the new Rural Energy Challenge Fund will provide financial support for low carbon, renewables and whole system projects for heat, electricity, transport, energy management and ownership.

Chris Morrison, of Local Energy Scotland, which manages the Cares scheme, said: “This fund is an opportunity for businesses and social enterprises in rural areas of Scotland to develop proposals that will make a difference in the community that they live in.

“Local Energy Scotland is available to support all potential applicants and we welcome early engagement to help develop projects.”

Minister for Business, Innovation and Energy, Paul Wheelhouse, hailed the launch of the fund.

He said it had the potential to have a long-lasting positive impact on rural communities across Scotland. He said: “We are developing a radical approach to energy whereby the focus is on giving local communities ownership, and greater control, of energy production.

“The Rural Energy Challenge Fund is a great opportunity for farmers, land managers and small business owners to address some of the energy challenges they face.

The maximum grant available through the scheme is £150,000.