Salix Funding Explained
Salix is a government-owned organisation that delivers funding schemes to help the public sector reduce their carbon emissions in line with the UK’s 2050 net zero target.
Since its formation in 2004, Salix has helped public sector organisations commit to more than 21,500 projects by administering £2.7 billion of funding, with projects saving 1.1 million tonnes of carbon dioxide annually.
Various tranches of funding are available through Salix for energy efficiency and decarbonisation improvements, with differing criteria, depending on the type of organisation and where you are in Britain. Here’s our quick guide to the schemes that are live, as of June 2024.
Public Sector Decarbonisation Scheme (PSDS) – England
The Public Sector Decarbonisation Scheme (PSDS) provides grants for public sector bodies in England to fund heat decarbonisation and energy efficiency measures. Most of the buildings in the public sector still rely on burning fossil fuels for heating, hot water, and catering – so this is an area of huge untapped potential.
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.
We are currently anticipating Phase 4 of the scheme, with further details to be announced in summer 2024. Feedback from previous phases will result in changes to Phase 4, such as a more targeted funding allocation process, the creation of funding pots, and a Low Carbon Skills Fund.
We will update this page as more details are released.
For more information, visit our PSDS guide.
Public Sector Low Carbon Skills Fund
The Public Sector Low Carbon Skills Fund provides grants to boost decarbonisation skills and unlock decarbonisation in the public sector. It will offer up to £16 million in funding for applications which will allow public sector organisations to create robust heat decarbonisation and energy efficiency plans by engaging specialist skills and advice.
There are typically three stages within a heat decarbonisation journey: the strategy stage, feasibility stage, and design stage. A range of activities within these stages are eligible for funding.
The application portal for Phase 5 of the scheme has now closed and applicants will be notified by the end of July. Projects must be delivered by 31 March 2025.
For a more information, visit our Low Carbon Skills Fund Phase 5 explainer.
Scotland’s Public Sector Heat Decarbonisation Fund
The Scottish Government made £20 million grant funding available for the 2023 financial year under Scotland’s Public Sector Heat Decarbonisation Fund which will be delivered by Salix.
The Fund is aimed at helping the public sector decarbonise their heating systems by replacing them with zero direct emissions systems, as well as for retrofit energy efficiency measures to support the overall decarbonisation of heat in buildings.
The fund allows for applicants to apply for single or multi-year funding to support the delivery of their heat decarbonisation and/or energy efficiency project(s).
Eligible bodies include arm’s length external organisations (ALEOs), local authorities and universities.
Applications for the scheme are currently closed, but will open later this year for projects starting in the 2025/2026 financial year.
Read more about Scotland’s Public Sector Heat Decarbonisation Fund.
Scottish Public Sector Energy Efficiency Loan Scheme
The Scottish SEELS Loan Programme offers zero interest loans to the public sector to enable them to undertake energy efficiency improvement projects. Funded by the Scottish Government, the available funding allows Salix to offer up to 75% of the total compliant project value along with increased payback criteria (subject to technical review and due diligence).
Project criteria in Scotland offer up to a 12-year payback at a cost of £305 per tonne of carbon dioxide (£305/tCO2) over the lifetime of the project on all new loan agreements.
Funding for the 2024/2025 financial year is closed due to reaching funding capacity, but may open later in the year for projects commencing the next financial year. More information is on the Salix website.
The Scotland Recycling Fund
The Salix Recycling Fund, as part of the Scottish Public Sector Loan Scheme, is a ring-fenced fund held by the eligible public sector body, created with capital provided by Scottish Government through Salix, and equally matched by the public sector body.
The scheme aims to increase long-term investment in energy efficient technologies across the public sector. Over 100 technologies are eligible including lighting, heating, and insulation.
The Salix contribution is a long-term 100% interest-free repayable grant. Scottish local authorities can use their former Central Energy Efficiency Fund or their own capital as their match contribution. The financial savings achieved by the projects are reinvested in further eligible projects year on year, hence the term ‘Recycling Fund’.
Up to 25% of annual energy savings can be kept as immediate savings, with 75% ring fenced in the fund.
Project compliance criteria allow for up to a 12-year payback at a cost of £305 per tonne of carbon dioxide saved.
Read more about the Scotland Recycling Fund.
The Wales Funding Programme
The Wales Funding Programme allows public sector bodies to apply for interest-free loans for up to 100% of the costs of energy-saving or renewable energy projects.
It combines both the Salix Energy Efficiency Loan Scheme, which focuses on funding energy efficiency projects, and the Invest to Save finance scheme which focuses on funding energy efficiency and renewable technologies.
Those who apply to the scheme will also receive support from a designated relationship manager.
Funding is available for projects that are at a well-defined stage. Applications for the 2023/2024 financial year are closed, and applications received from 8 March will be considered when new applications open for the 2024/2025 financial year.
Read more about the Wales Funding Programme.
Digarbon
Announced in April 2024, Digarbon is a new funding scheme for the decarbonisation of the tertiary education sector in Wales. Up to £20m in funding will be available to further and higher education. Heat decarbonisation, energy efficiency, renewable, and electric vehicle and electric vehicle charging infrastructure measures will all be supported.
A ‘soft’ sector cap will be applied when allocating funding of which 25% of the available funding will be allocated to the Further Education Sector, with 75% allocated to the Higher Education Sector. Should there be insufficient successful applications to fully allocate funding to a sector, funding will be allocated to the other sector.
The Digarbon Application Portal will open from Tuesday 2 July at 2pm and will close on Thursday 8 August 2024 at 2pm.
How Concept can help
At Concept we have successfully supported many organisations with Salix-funded projects.
We can help you identify the best energy efficiency and carbon reduction measures, ahead of future funding rounds. We’ve conducted energy surveys for many public sector organisations across the UK, and will help you identify the solutions that deliver the best cost and carbon reduction outcomes, as well as well as a list of measures that meet Salix criteria.
Get in touch for advice, or if you’d like to learn more.
