Public Sector Decarbonisation Scheme (PSDS)
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PSDS Phase 4 Updates
Update from 13/03/25
Applications for Phase 4 ended on 25 November 2024. All successful applications will be awarded funding by approximately the end of May 2025, and projects must be delivered by the end of March 2028.
After the Autumn Budget 2024 revealed over £1 billion allocated for public sector decarbonisation, the Department for Energy Security and Net Zero has confirmed the launch of Phase 4 of the Public Sector Decarbonisation Scheme. Most of the funding will be distributed during the second and third years of the scheme:
✓ £86 million in 2025/26
✓ £427 million in 2026/27
✓ £427 million in 2027/28
With the Public Sector Decarbonisation Scheme aiming to cut emissions from public sector buildings by 75% by 2037, it’s likely that further funding phases will follow. We’ll keep you informed as soon as any announcements are made regarding Phase 5.
Update from 30/10/24
Applications are due by Monday, 25 November 2024, at 2 pm. With funding in high demand, submitting early is encouraged to secure your opportunity to support energy efficiency and carbon reduction efforts.
If you’re planning to submit, ensure that your application highlights the projected carbon reduction and cost-efficiency gains. Strong data supporting your project’s environmental impact and long-term savings can be critical in getting your proposal approved. Reach out to our team if you have any questions or need any support.
Update from 01/08/24.
The Public Sector Decarbonisation Scheme (PSDS) is entering a new phase to support public sector organisations in achieving their net zero goals. Phase 4, delivered by Salix Finance on behalf of the Department for Energy Security and Net Zero (DESNZ), marks a shift towards a more targeted approach for allocating grants.
The eligibility criteria for Phase 4 of the Public Sector Decarbonisation Scheme have changed due to the Procurement Act 2023, replacing the Public Contract Regulations. Now, eligibility is defined more broadly, potentially affecting some universities with significant private funding. Additionally, funding allocation has shifted from a first-come, first-served basis to a targeted approach, prioritising projects with the most direct carbon emissions savings. The sectoral ‘soft caps’ policy remains, and emphasis will be placed on considering heat networks for low-carbon heating solutions.
Focus On Impact
While previous phases operated on a first-come, first-served basis, Phase 4 will prioritise projects with the highest potential for emissions reduction. This ensures funding goes towards initiatives that deliver the most significant environmental impact.
Increased Funding
The government has committed £1.17 billion for Phase 4, spread out over the next three years: £670 million available in 2025 to 2026, £300 million in 2026 to 2027, and £200 million in 2027- 2028.
Building On Success
Phase 4 builds on the achievements of the previous phases, which awarded over £2.22 billion in grants and supported nearly 1,000 decarbonisation projects in public sector buildings.
What is The Public Sector Decarbonisation Scheme? (PSDS)
The Public Sector Decarbonisation Scheme (PSDS) is a UK government initiative designed to help public sector organisations reduce their carbon emissions and contribute to the country’s target of achieving net-zero greenhouse gas emissions by 2050. The scheme provides funding to support the installation of energy-efficient and low-carbon technologies in public sector buildings, including schools, hospitals, and local authority buildings.
The PSDS was launched in October 2020 and is part of a wider £3 billion package of measures announced by the government to decarbonise public sector buildings and reduce carbon emissions across the UK. The scheme is open to all public sector organisations in England, Scotland, and Wales, including central government departments, local authorities, NHS trusts, and educational institutions.
How Does The PSDS Scheme Affect You?
The scheme provides grants for a range of energy-efficient and low-carbon measures, including insulation, LED lighting, and the installation of low-carbon heating systems such as heat pumps and biomass boilers. Funding is also available for the installation of on-site renewable energy technologies, such as solar panels and wind turbines, which can help public sector organisations to generate their own clean energy and reduce their reliance on fossil fuels.
The PSDS aims to help public sector organisations to make long-term energy savings and reduce their carbon footprint, while also creating jobs and stimulating economic growth. The scheme is part of the government’s wider commitment to a green recovery from the COVID-19 pandemic and to achieving net-zero emissions by 2050.
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