PSDS: Phase 4 moves away from ‘first come first served’ approach
The government has confirmed Phase 4 of the Public Sector Decarbonisation Scheme (PSDS), which funds low carbon heating projects in public sector buildings.
Salix has been delivering the scheme since 2020, awarding £2.22 billion funding to almost 1,000 projects to date. Projects must include the replacement of end-of-life fossil fuel heating systems with low carbon heat sources, such as air source heat pumps or solar thermal. For a whole building approach, these may be ‘bundled’ with energy efficiency measures where possible, such as building management systems, insulation, and metering.
Phase 4 will be more targeted
Full details on Phase 4 will be published in summer 2024; but we do know that the grant allocation process is changing.
While applications for Phases 1, 2 and 3 of the scheme have been awarded grants in the order in which they were received, applications received under Phase 4 will be assessed through a targeted allocation process.
This means funding will be allocated towards projects delivering the best value for money with the most direct carbon emission reductions. Salix says that “this will target funding towards high-quality projects that contribute most to the scheme’s carbon-saving goal”.
The sector cap system, ensuring a proportionate distribution of funds across different sectors of the public estate, will remain in place.
Funding pots
Future funding for the PSDS was confirmed in December last year by the government.
£1.17 billion has been allocated for public sector decarbonisation, and will follow a profile of £670 million in 2025/26, £300m in 2026/27 and £200m in 2027/28.
Up to £335 million for 2025/26 is currently being awarded in grants for the previous PSDS Phase (3c). The majority of the remaining funding will be allocated to Phase 4 of the PSDS.
Low Carbon Skills Fund
Salix is also set to announce details of the next round of the Low Carbon Skills Fund (LCSF) – which awards funding to help public sector organisations develop decarbonisation plans for their estates. We will update you with further details when we get them.
Get in touch
PSDS Phase 4 guidance will be published in summer; more information can be found on the Salix website.
Concept has successfully supported many organisations with Salix-funded projects. Get in touch for advice, or if you’d like to learn more.
