Public Sector Decarbonisation Scheme (PSDS) – Phase 3: Everything you need to know


Phase 3 of the Public Sector Decarbonisation Scheme (PSDS) was announced in September and will open for applications from 2 pm on Wednesday, 6 October 2021, closing on Wednesday, 3 November 2021.

What will Phase 3 cover?

Managed by Salix, Phase 3 of the PSDS will take a similar approach to Phase 2, with the main objective to support low carbon heating in public sector buildings, in addition to improving their energy efficiency.

Most buildings in the public sector still rely on fossil fuel-based heating. This phase will help fund low-carbon replacements specifically for heating systems approaching the end of their working lives and is a great opportunity to support public sector low carbon ambitions.

The scheme provides funds to replace ‘end-of-life’ fossil fuel systems (such as gas boilers), with low carbon heat sources combined with additional energy efficiency measures to facilitate a ‘whole building’ approach to heat decarbonisation.

85% of the 2022/23 grant funding has been set aside for projects that need to take place between Friday 1st April 2022 and Friday 31st March 2023. A smaller proportion has been set aside for those expected to reach the end of their working lives in 2023/24 or 2024/25 and where the work needs to start in 2022/23.

Who is eligible?

The scheme is open to a wide range of public sector bodies in England, Scotland, Wales, and Northern Ireland, those eligible include:

  • Central government departments and their arm’s length bodies
  • Emergency services
  • Institutions of further and higher education
  • Local authorities
  • Schools within the state education system, including maintained schools, academies, Multi-Academy Trusts and free schools
  • Nursery schools maintained by a local authority
  • NHS Trusts and Foundation Trusts

Phase 3 deadlines and the application process

Phase 3 of the PSDS was announced on Wednesday 8th September 2021, along with full scheme guidance material. The total amount of funding available for Phase 3 of the scheme will not be confirmed until after this year’s Spending Review.

Most of the grant funding has been set aside for projects that need to take place between Friday 1 April 2022 and Friday 31 March 2023.

Once the total Phase 3 PSDS budget is confirmed, 85% of the 2022/23 budget will be allocated to single-year projects where the heating system has reached the end of its working life, and the remaining 15% will be allocated to the first year of multi-year projects which must start in 2022/23 and end in either 2023/24 or 2023/25.

Organisations must clearly state whether they intend to apply for a single year project or a multi-year project at the application stage.

When do applications open?

The Phase 3 PSDS Application Portal will be available and accepting applications from Wednesday 6th October 2021.

The application form was published at 2 pm on Wednesday, 15th September 2021 so speak to your consultant early to find out how best to prepare.

When do applications close?

Applications close on Wednesday 3rd November 2021 at 2 pm. Applications will be assessed and funding awarded to eligible projects in the order in which applications are received on the Salix Application Portal so it’s important to act fast. If Salix receive enough applications, they may close the portal early as they have with other schemes.

Successful applicants will be notified in 2022, all applicants that are awarded funding for single year projects, must complete all projects by Friday 31st March 2023.  Successful applicants for multi-year projects must complete by Sunday 31st March 2024 or Monday 31st March 2025 and will require evidence of spend in each financial year funding is provided.

The PSDS journey so far: Phase 1 and 2

We are currently approaching the opening date for phase 3 applications of the PSDS, but here’s what happened in the previous phases:

Phase 1

Phase 1 of the Public Sector Decarbonisation Scheme provided £1 billion in grants as part of the Chancellor’s ‘Plan for Jobs 2020’, commitment to support the UK’s economic recovery from COVID-19. It has supported up to 30,000 jobs in the low carbon and energy efficiency sectors.

Phase 2

Phase 2 of the Public Sector Decarbonisation Scheme provided £75 million of grant funding for the financial year 2021/2022. It had a stronger focus on heat decarbonisation than Phase 1, in order to deliver greater carbon emission reductions. It has supported the public sector in taking a ‘whole building’ approach when decarbonising their estates.

The Public Sector Decarbonisation Scheme explained

In 2019, the UK Government announced a commitment to reach net zero emissions by 2050. Since that announcement, the public sector has been at the forefront of their decarbonisation plans.

Heating is currently the largest source of emissions in the UK, accounting for 37% of the overall carbon footprint. To help combat this, the Government is looking to prioritise tackling heat decarbonisation within the public sector.

As a result, the Department of Business Energy & Industrial Strategy (BEIS) announced two Public Sector schemes the Public Sector Decarbonisation Scheme (PSDS) and the Low Carbon Skills Fund (LCSF) designed to help decarbonise buildings in the UK.

The second round of the Low Carbon Skills Fund recently opened with £15 million worth of funding available. The application portal was closed within just five working days after the value of applications had reached £36 million but will reopen for applications from maintained schools and academies (with £3.5 million reserved specifically) on Monday 13th September 2021.

The PSDS scheme is being delivered by Salix and allows eligible organisations to apply for funds to cover the costs of implementing heat decarbonisation and energy-saving projects in non-domestic buildings. The scheme encourages green investment and supports the government’s net zero target and clean growth strategy.

How Inspired Energy can help

Inspired Energy PLC is the perfect partner to support you in your application for the Public Sector Decarbonisation Scheme with over 20 years’ experience supporting organisations like yours with their energy needs.

We’ve supported over 1,200 Public Sector organisations to manage and optimise their energy and to reduce their carbon footprint on their path to net zero.

We can determine your feasibility for this PSDS phase, support you through the application process, identify suitable technologies to benefit your organisation and manage the implementation and delivery of those projects.

If you’d like to speak to an energy expert about how we can help with your PSDS application, heat decarbonisation plans and more, call us on 01772 689 250 or email