Salix Funding Explained (Updated)
Salix is a publicly funded scheme that provides 100% interest-free, conditional loans to public sector organisations to improve their onsite energy efficiency. To date, Salix has funded over 19,000 projects valued at £1,072 million. This has saved the public sector £222 million annually and will reduce annual public sector carbon dioxide emissions by 895,000 tonnes1.
Salix supports energy efficiency and decarbonisation improvements for public sector bodies, such as local authorities and NHS foundation trusts, helping them to reduce carbon emissions in line with the government’s 2050 net zero target.
Various tranches of funding are available through Salix, with differing criteria, depending on the type of organisation and where you are in Britain.
Public Sector Decarbonisation Scheme (PSDS).
The Public Sector Decarbonisation Scheme (PSDS) replaced the England Salix Energy Efficiency Loan Scheme and has to-date been delivered in three phases. Applications for this funding in England are currently closed.
The first phase of PSDS allocated £1 billion to public sector bodies. The aim was for it to be a catalyst for the introduction of heat decarbonisation and energy efficiency measures that could deliver significant carbon savings.
Phase 2 of the PSDS had a stronger focus on heat decarbonisation to support a ‘whole’ building approach to carbon reductions across the public sector. The funding offered £75 million to public sector organisations and closed when the value of applications reached more than £150m.
Phase 3 of the PSDS will receive £1.425 billion of funding over the period 2022/2023 to 2024/2025 with the focus remaining on the decarbonisation of heat.
All phases of PSDS are currently closed to applications.
Recycling Fund
The Recycling Fund is a ring-fenced fund managed by the public sector organisation, with money provided by the organisation and match funded by Salix. The project loan is repaid into the fund from the financial savings delivered by the projects – this allows the fund to be continually used for energy efficiency projects, hence the term ‘Recycling Fund’. At the same time the organisation continues to benefit from the savings that accumulate once the project has been fully repaid.
The recycling fund will remain open until March 2025. However, some changes are being made to the fund to align with the government’s climate change policy priorities. By March 2022, Recycling Fund clients need to submit a three-year plan to address how each project is linked to a wider heat decarbonisation strategy.
From April 2022, to be eligible for this funding, projects must either include a measure that directly contributes to the heat decarbonisation of a building by installation of a low carbon heating technology and/or building fabric upgrades or provide justification for how electricity reduction measures, which do not directly contribute to the heat decarbonisation of a building but reduce overall energy demand, will support a wider heat decarbonisation project in the future. In a further change, over the lifetime of the project, the cost to save a tonne of carbon must be no more than £500/tCO2eLT.
Funding in Wales
Working with the Welsh Government, Salix can provide public sector bodies in wales funding through the Wales Funding Programme. To date, the interest free loads have been used by 92 different organisations with more than £59 million invested in energy efficient projects with an estimated saving of £170 million. In order to qualify for funding, the criteria for the cost to save a tonne of carbon has increased from £200/tCO₂eLT to £278/tCO₂eLT to account for the progress made in greening the electricity grid.
Applications and expressions of interest for the Wales Funding Programme are welcomed.
Salix in Scotland
Zero interest loans for public sector bodies in Scotland are available via the Scottish Public Sector Energy Efficiency Loan Scheme, which forms part of the Scottish Green Public Sector Estate Decarbonisation. The loan – which can be up to 75% of the total project cost – can be used towards retrofit energy efficiency improvement projects that help organisations achieve net zero across their estates.
Applications and expressions of interest for the Scottish Public Sector Energy Efficiency Loan Scheme are welcomed.
Concept Energy can support your organisation with all aspects of the Salix application process. If you’d like advice on any of the schemes, or how we can can help, get in touch.
Sources
- Figures as of March 31 2021. https://www.salixfinance.co.uk/
