Phase 3 Public Sector Decarbonisation Scheme

Welcome to the Phase 3 Public Sector Decarbonisation Scheme (Phase 3 PSDS). Salix would like to invite you to familiarise yourself with the statement here made by the Department for Business, Energy and Industrial Strategy (BEIS) on the Government website in relation to the policy behind the scheme.  As the delivery partner of Phase 3 PSDS we explain below how Salix will implement the new Phase 3 PSDS.

To view your draft/submitted Phase 3 Public Sector Decarbonisation Scheme application please view the My PSDS Applications area

The Phase 3 PSDS  Application Portal is now closed

BEIS note regarding confirmation of funding available for
Phase 3 Public Sector Decarbonisation Scheme

Phase 3 of the Public Sector Decarbonisation Scheme opened for applications at 2pm on Wednesday 6th October 2021, with scheme guidance published on Wednesday 8th September 2021. The Application Portal closed four weeks later at 2pm on Wednesday 3rd November 2021. Applications will be assessed in the order in which they are received. 

Applications should be for projects incurring costs no earlier than Friday 1st April 2022, and no later than:

  • Friday 31st March 2023 for single year projects 
  • Sunday 31st March 2024 for two year projects
  • Monday 31st March 2025 for three year projects

“Reflecting the importance of the public sector's role in meeting the Government's commitment to Net Zero by 2050, the Net Zero Strategy and Heat and Buildings Strategy have confirmed that Phase 3 of the Public Sector Decarbonisation Scheme will receive £1.425 billion of funding over the period 2022/23 to 2024/25. Further detail will be published in due course.”

Applications are submitted at the risk of the Applicant. Applications will be assessed, and funding awarded to eligible projects, in the order in which applications are received. Grant offers will only be made after the total funding for the Phase 3 PSDS is confirmed. We do not expect to be able to inform applicants if they have been successful until 2022.

At Salix we have used our learning from delivering Phase 1 and Phase 2 PSDS to design the model for delivering this next phase. We have listened carefully to feedback from our clients, our stakeholders, decision-makers, and other professionals.

For Phase 3 the focus remains on the decarbonisation of heat. This helps the UK to meet its Carbon Budgets and Net Zero commitments through the implementation of energy efficiency and decarbonisation measures in buildings across the public sector.

The scheme has a set of conditions that are designed to ensure that the policy direction, required by Government, delivers on the agenda for the decarbonisation of heat. It aims to help the public sector keep on track to deliver its share of the Fourth, Fifth and Sixth Carbon Budgets.

However, there are some essential differences to this new phase. These include funding available, how that funding is delivered, and the introduction of multi-year settlements.

There is also no funding cap on the value of grant an Applicant can apply for. Whilst there is no cap, Applicants must ensure they have the necessary resources and suppliers in place, required to deliver the project by the agreed dates. This must be demonstrated clearly within the application.  As a minimum all Applicants are required to contribute the “like-for-like” costs of the project themselves in addition to any PSDS grant funding provided. The like-for-like cost is defined as all the costs incurred should the existing heating system be replaced with a typical fossil fuel heating system of the same type and size. In most cases this will be equivalent to the costs of replacing your system with a conventional boiler.

Applications are submitted at the risk of the Applicant. Applications will be assessed, and funding awarded to eligible projects, in the order in which applications are received. Grant offers will only be made after the total funding for the Phase 3 PSDS is confirmed. We do not expect to be able to inform applicants if they have been successful until 2022.

The Application Portal opened at 2pm on Wednesday 6th October and will be closed four weeks later at 2pm on Wednesday 3rd November 2021.

Please see our Guidance Notes which includes sections on scheme criteria and eligibility. This will give the public sector the technical information needed to plan and design a project consistent with the requirements of Phase 3 PSDS.

Below is a summary of the key elements of the scheme, but please refer to the Guidance Notes for full details.

Purpose of scheme

Phase 3 PSDS is aimed at taking a ‘whole building’ approach to heat decarbonisation, combining heat decarbonisation with energy efficiency measures.

Most of the buildings in the public sector still rely on fossil fuel-based heating and, as these heating systems approach the end of their working lives, it is an ideal opportunity to transition those systems to low carbon heating. 

The Public Sector Decarbonisation Scheme puts the public sector at the forefront of decarbonising buildings in the UK and in a leadership role to create exemplar projects in our communities that pave the way to help the UK meet its Carbon Budgets and Net Zero commitments.

What is a multi-year settlement?

The priority for Phase 3 PSDS is to provide funding for decarbonisation projects where the heating systems are at the end of their working lives and there is imminent need for replacement, therefore the majority 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 of the 2022/23 grant funding has been set aside to specifically support decarbonisation projects involving heating systems that are 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. 

Once the total Phase 3 PSDS budget is confirmed, 85% of the 2022/23 budget will be allocated to the 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 2024/25. Organisations must clearly state whether they intend to apply for a single year project or a multi-year project at the application stage. It will not be possible to convert a single year project into a multi-year project once the application has been submitted. 

Multi-year applications can complete in either 2023/24 or 2024/25. Multi-year applications must include an element of work that is completed in the financial year 2022/23 with a clear year on year breakdown of the funding stated. Future phases of the Public Sector Decarbonisation Scheme are likely to be available for projects that start in the financial year 2023/24 onwards.

Grant Offer Letters for single year Applicants will be issued early in 2022. Eligible projects must be completed by 31st March 2023.

Multi-year grants will see successful applicants receive Grant Offer Letters in early 2022, with the projects being completed in phases. The Applicant must complete the 2022/23 portion of the eligible project by 31st March 2023, the 2023/24 portion of the eligible project by 31st March 2024, and the 2024/25 portion by 31st March 2025.

Who can apply?

The organisations eligible to apply are the same as for Phase 2 PSDS. These include:

  • Central government departments and their arm’s length bodies (set out in the list of departments, agencies and public bodies as published on .GOV.UK). For central government departments where their roles are reserved (i.e., not devolved to Scottish or Welsh Governments or the Northern Ireland Executive), funding may be used for estates located anywhere within the UK
  • Emergency services
  • Institutions of further and higher education
  • Local authorities
  • Maintained schools within the state education system, including academies, Multi-Academy Trusts, and free schools
  • Nursery schools maintained by a local authority
  • NHS Trusts and Foundation Trusts

Private sector organisations are not eligible to apply for funding through the scheme. 

This means that schools funded by charities, private schools, private colleges, and private universities are not eligible to apply.

Social housing is also excluded.

The Application Form will require all Applicants to state which public organisation they belong to.

What funds are available and is there a maximum that any organisation can apply for?

There is no cap on the amount of Phase 3 funding an Applicant can apply for and there is no minimum sum.

Salix may award grants for projects undertaken jointly by two or more successful Applicants; in which case it shall identify the amount granted to each Applicant. 

For example, a larger organisation may have several sites, in which case Salix would accept more than one application per organisation. We would not expect an organisation to submit separate applications for the same site.

Salix may also award grants to Applicants in respect of more than one project. 

Applicants can also use their own funds to top up a project which they wish to complete. This is on top of the mandatory requirement for organisations to contribute the “like-for-like” costs of the project themselves in addition to any PSDS grant funding provided.

Eligible projects

Eligible projects are those undertaken in England, by the Applicant, involving the installation of heat decarbonisation and energy efficiency measures. There are a number of requirements and please see our Guidance Notes here for full information.

Applicants must also demonstrate how they are obtaining value for money, as part of the application process. The carbon cost threshold provides good guidance on costs.

If my organisation was funded in Phase 1 or 2, can I apply again?

There is no restriction in applying to Phase 3 PSDS if you were successfully funded in Phase 1 and 2. However, all previously funded projects must continue to meet their deadlines. Any slippage in those projects should act as an indicator that additional projects may not deliver to the required timescale of Phase 3 PSDS.

You will be asked in the application to outline any previous funding through PSDS.

When do projects have to complete by in Phase 3 PSDS?

Phase 3 will offer multi-year settlements.

All single year grant projects in Phase 3 PSDS must be fully installed by 31st March 2023.

All multi-year grant projects in Phase 3 PSDS must state up front what costs will be incurred in each financial year, and the work associated with these costs must be completed by 31st March of each year. Multi-year grants will be available for projects lasting up to three years. 

Projects must complete before the specified deadlines. Applicants will be liable for any project costs which are incurred after the deadline(s). For multi-year projects, grant funding cannot be transferred between years, and the Applicant will be liable for any project costs incurred outside of the year agreed in the Grant Offer Letter.

If you have been successfully funded in Phase 1 and Phase 2 and you know that you have challenges in meeting the commitments to delivery, Salix urges caution in applying for Phase 3 as this will be taken into consideration when Salix assesses delivery plans submitted in the Phase 3 PSDS Application Forms.

How will applications be managed fairly?  

Applications will be assessed in the order in which they are received on the Salix Application Portal. Phase 3 PSDS requires that applications contain all the information required at the point of submitting the application.

If applications are incomplete, do not have the correct authorisation, required supporting documentation, or are not submitted by the eligible organisation, they will be removed from the process. If an application has been removed, an Applicant may apply again, however, they will then drop down in order.

Please note that although a consultant may help you with your application, the actual application must be submitted by the public sector body. It must also be authorised by the Authorising Official, or the individual officially delegated to act on their behalf.

Our Salix Phase 3 website area will keep people informed. Please do keep an eye on the website.

Assessing applications

Applications will be assessed, and funding awarded to eligible projects, in the order in which applications are received. It may not be possible to fund all applications within the available funding.

What is the Phase 3 PSDS main eligible measures?

The Phase 3 scheme is technology neutral, and measures are judged on their ability to reduce carbon emissions. 

The installation of fossil fuel measures through this scheme is not available. Funding is provided for costs over and above the like for like replacement costs of a fossil fuel heating system.

The criteria for Phase 3 PSDS are carefully defined and every Applicant must study the criteria carefully and demonstrate and provide proof in their application that the project is tackling decarbonisation.  

Eligible costs

Applicants must provide evidence that no other funding streams are available for their application.

As a minimum all Applicants are required to contribute the “like-for-like” costs of the project themselves in addition to any PSDS grant funding provided. The like-for-like cost is defined as all the costs incurred should the existing heating system be replaced with a typical fossil fuel heating system of the same type and size. In most cases this will be equivalent to the costs of replacing your system with a conventional boiler.

The Applicant must also prove that a ‘whole building approach’ is being used. So, any funding for energy efficiency measures is only permitted where they are bundled with low carbon heating measures and can be demonstrated to be part of the ‘whole building approach’ to heat decarbonisation.

Application verification process 

All applications must be fully completed using the relevant Phase 3 Application Form which is only available on the Phase 3 Application Portal. Incomplete applications will be withdrawn from the process.  Applications must be robust and fully comply with all fields.

Before applications enter the technical assessment process, they will go through an initial verification process. This process means Applicants must supply certain documents to support their application. These are outlined in the Guidance Notes.

The verification process will satisfy Salix that the organisation applying is an eligible organisation, and that all parts of the Application Form have been completed. Those that are not completed or have not submitted the required documentation will be removed and returned to the Applicant explaining why their application has been removed from the process.

If the Applicant is funded under a previous phase of the PSDS, a check will be made that the projects funded are all delivering to plan and to the agreed completion date.

If, during the assessment process, any projects are deemed ineligible or reduce in value, the projects from the reserve list will then be assessed.
This method of dealing with applications will continue until all funds available have been allocated.  

Application Form and supporting documentation

It is important to note that the online Application Form, available on our site, is only one part of the application process. It is essential that Applicants submit comprehensive supporting documentation; please see our Guidance Notes for the information required. It will be imperative to provide a statement describing the project and what technologies will be used, as well as a delivery plan setting out a financial profile of how an Applicant thinks they will draw down funding over the lifetime of a project.

Applicants must provide all feedback requested by Salix. Please see the Guidance Notes for full details. The Application Form must come from a member of staff of the eligible organisation and be submitted by the eligible organisation. Applications submitted by anyone else, including independent consultants, will be removed from the process. The application must be made by the eligible organisation.

    
Key dates and deadlines

The Application Form was published at 2pm on Wednesday 15th September 2021.

The Application Portal opened at 2pm on Wednesday 6th October 2021 and will close four weeks later at 2pm on Wednesday 3rd November 2021.

For successful applications, Salix will award a Grant Offer Letter, subject to a fully completed and authorised application. It is not expected that any Grant Offer Letters will be issued until 2022.

All projects awarded funding must be completed by the required deadlines for single year grants or multi-year grants.

There is no flexibility to agree funding beyond those deadlines. If your project does not complete by agreed deadlines there will be no funding available for the balance of the project. 

All Phase 3 PSDS enquiries should be sent by email to [email protected] 

Salix seeks to reply to all emails within three working days.