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A Deep Dive into Phase 4 of the Public Sector Decarbonisation Scheme

In a world increasingly focused on sustainability, the need for significant action in reducing carbon emissions has never been more urgent. The UK government’s Public Sector Decarbonisation Scheme (PSDS) is aimed at helping public sector organisations transition to net zero emissions. With the launch of Phase 4, this scheme continues to evolve, offering exciting opportunities for public entities to enhance their sustainability efforts.



What’s New in Phase 4?


Salix Finance will once again be delivering the scheme on behalf of the Department for Energy Security and Net Zero. Through Phase 4 of the Public Sector Decarbonisation Scheme, the Department for Energy Security and Net Zero will make capital funding available from 2025/26 to 2027/28.  The value of available funding and the profile split across the three financial years will be confirmed in due course.  


Phase 4 of the PSDS builds upon the successes of previous phases, offering increased funding opportunities and streamlined processes for applicants. Here are the key highlights:


  1. Increased Funding: Phase 4 has a substantial budget allocated to support decarbonisation projects. This funding enables public sector organisations to invest in necessary upgrades, from insulation improvements to renewable energy systems.We expect the total budget will be confirmed after the spending review at the end of October.


  2. Wider Eligibility: The scheme has broadened its scope, allowing more public sector bodies to apply. This includes schools, universities, and local councils, ensuring a more comprehensive approach to decarbonisation across the public sector. The scheme is also no longer first come first served, the grant is given based on value for money per tonne of CO2 saved in the lifetime of equipment. (£510/tCO2LT)


  3. Focus on Heat Decarbonisation: A significant emphasis is placed on transitioning from fossil fuel heating systems to more sustainable alternatives, such as heat pumps and biomass boilers. This shift not only reduces emissions but also promotes energy resilience.


  4. Simplified Application Process: The application process has been streamlined, making it easier for organisations to access the funding they need. Clear guidelines are in place to assist applicants throughout the process.


  5. Emphasis on Collaboration: The scheme encourages partnerships between public sector organisations and energy service providers. This collaborative approach fosters innovation and accelerates the implementation of effective decarbonisation strategies.



Benefits of Participation


Participating in the PSDS offers numerous benefits for your organisation:


  • Cost Savings: By investing in a suitable mix of energy-efficient measures, organisations can significantly reduce their energy bills and operational costs over time.


  • Improved Facilities: Upgrading infrastructure not only enhances energy efficiency but also improves the comfort and safety of public spaces for staff and the community.


  • Funding Accessibility: With increased funding and support, organisations can undertake ambitious projects that might otherwise be financially unfeasible. The project being “additional” is a stipulation of Salix, in that the project is not planned to go ahead with the funding.



When is the application portal open and how to apply


Salix will be opening the applications portal in mid-October and will close on 28th November.


Applicants will need to decide the profile of grant spend required across each financial year to deliver the project. Following the application submission, applicants will not be able to amend their requested profiles. During the assessment process, it will be at Salix’s discretion to approve any changes to this profile. If successful, grant funding will be allocated for each financial year. Once agreed via the Grant Offer Letter, funding cannot increase and cannot be moved between financial years.


Applicants must either own the building that the funding is being used to upgrade or have a lease arrangement where the tenancy agreement places the responsibility for operation and maintenance of the building services on the applicant. Buildings with a Private Finance Initiative (PFI) arrangement where operation and maintenance is funded from PFI unitary charges paid by the applicant are also eligible.


Successful projects must be designed to complete no later than 31 March 2028.



How can LCE help?


LCE provides invaluable support through their expertise and resources to help organisations navigate the application process, helping organisations harness the full potential of the funding available.

 

We have had plenty of success with Public Sector Decarbonisation Scheme applications for our clients in the past so if you would like LCE to help with your application for future phases of the PSDS, please do get in touch with us today.



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