Phase 4 of the Public Sector Decarbonisation Scheme (PSDS) Announced

Overview

Salix has announced that Phase 4 of the Public Sector Decarbonisation Scheme (PSDS) will be open to applications in Autumn 2024. This phase aims to build on the successes of previous phases, supporting the reduction of direct emissions from public sector buildings by 75% by 2037 compared to a 2017 baseline.

HI Group have attended webinars and undertaken research to clarify any changes to the grant conditions and application process. This briefing aims to provide you with the latest information and actionable steps to navigate the upcoming Phase 4 of the PSDS effectively.

What is the PSDS?

The PSDS is a grant facility to provide the required capital for public sector authorities to upgrade heating systems in public buildings to ones powered by cleaner, cheaper and renewable energy.
The funding covers the capital investment required to design, procure and install the required plant and equipment for the purpose of decarbonising heat. The solutions can include building thermal upgrades, heat pumps, solar PV, solar thermal, thermal stores, controls and BMS upgrades.

Key Updates

1. Application Process and Funding Allocation

Unlike previous phases, funding in Phase 4 will not be allocated on a first-come, first-served basis. Instead, a targeted approach will be employed, prioritising projects that deliver the most direct carbon emissions reductions and offer the best value for money.

The total funding available for Phase 4 is £1.17 billion, allocated as follows:

• £670 million for 2025/26
• £300 million for 2026/27
• £200 million for 2027/28

2. Sector Soft Caps

The sector soft caps introduced in Phase 3b will continue to ensure fair distribution of funds across various public sector sub-sectors based on their carbon emissions. The Health and Education sectors are expected to benefit significantly from this approach.

3. Grant Conditions

• Grant recipients are expected to contribute at least 12% of the project costs.
• Hybrid systems retaining end-of-life gas boilers will not be supported, although existing, non-end-of-life boilers may be retained for backup in complex buildings.

4. Eligibility Criteria

The eligibility criteria have been updated to align with the Procurement Act 2023, which broadly defines public sector bodies. This change primarily impacts universities with substantial private funding, while other public sector bodies remain unaffected.

5. Heat Network Zoning Legislation

Phase 4 will emphasize the consideration of heat networks, aligning with upcoming heat network zoning legislation, which will identify areas where heat networks are likely to be the most cost-effective low-carbon heating solution.

6. Timeline and Preparations

• The application portal is now open and will close on 25 November 2024.
• Detailed guidance, including application walkthrough videos and scheme guidance notes, were published in the summer of 2024.

Recommended Actions

To prepare for a successful application, we recommend the following steps:

1. Pre-Application Preparations

• Visit the Salix Finance Phase 4 portal: Phase 4 Public Sector Decarbonisation Scheme | Salix Finance
  Register well in advance for a Salix account here
• Review and prepare responses to the portal questions, which will be published in the scheme guidance.
• Compile and organise all necessary supporting documents, including design schematics, energy analyses, project costs, and risk registers.

2. On the Day of Application

• Ensure all documents are ready for upload.
• Have the Salix portal open and ready to use prior to the application opening time.
• Ensure the authorising officer is available to sign off on the application.

3. Post-Application Support
HI Group offers comprehensive support for drafting application answers, preparing supporting documentation, and familiarising your team with the application process.

If we have helped you on previous applications, or supported your design process to establish a heat decarbonisation strategy, we will continue to support your application and will contact you to discuss the level of work required, which includes:

• Drafting the application answers and ensuring the previous supporting documentation is adjusted to meet current grant conditions.
• Working with your appointed officer to ensure they are familiar with the process and able to copy and paste our answers into the application portal at the point of opening.
• Briefing your administrative team to familiarise them with the portal and supporting with any Q&As ahead of submission.

Supporting your application

If you would like us to support your application process, we can offer, subject to an individual agreement, a fixed fee price per single campus application with a supplementary fee for each additional campus included in the same application.

If the application progresses to the next stage, the cost of supporting the technical evaluation process is included in your fixed fee. Please contact us for pricing details.

Conclusion

Given the competitive nature of this funding and the new targeted allocation process, it is crucial to meticulously prepare your application to align with the new criteria and maximize your chances of success.

If you have any questions or would like to discuss how to progress your application, please contact our team here.