The criteria for Phase 2 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 heat decarbonisation.  Phase 2 criteria are different from those for Phase 1. 

To be eligible for the scheme, two new key criteria must be met (in addition to the existing Phase 2 PSDS criteria listed in the Guidance Notes):

  • Applicants must be using a fossil-fuelled heating system; and
  • The heating system in question must be coming to the end of its useful life

If these criteria can be met, then an application can be built around applying for grant funding for a new low carbon heating solution. Applicants must include, as part of their application, at least one measure that decarbonises part or all, of the heating within a building. 

Project criteria

Eligible organisations can apply for grant funding for projects which meet the compliance criteria below:

  1. Applicants must have and be using a fossil-fuelled heating system.
  2. The heating system in question should be coming to the end of its useful life.
  3. Applications must include a measure to contribute to decarbonise the heating with a low carbon heating system.
  4. Applicants can include energy efficiency measures and other enabling works where they support a ‘whole building’ approach to decarbonisation.
  5. The funding provided to save a tonne of non-traded carbon (CO₂e) over the lifetime of the project (the Carbon Cost Threshold (CCT)) must be no more than £325, which is automatically calculated by the Support Tool in the Grant Application Form. 
  6. Phase 2 PSDS is primarily for capital works, however external consultancy and management fees may be included.  Existing employee costs or any costs previously incurred may not be included.
  7. Reasonable enabling and ancillary works may be included in the application, provided they are directly linked to the core technologies being installed, and these will be reviewed for value for money.
  8. Individual applications can be made up to, but should not exceed, £5 million in value although an Applicant can submit more than one application.    
  9. Eligible bodies must either own the building that the funding is being used to upgrade or have a long-term lease arrangement where the contract allows for any savings to be passed to the eligible body.
  10. Projects must be in a position to complete by 31st March 2022. Funding is not available for projects that cannot deliver to this timeframe, and projects which do not complete before 31st March 2022 will be liable for any project costs incurred after this date. 

See Guidance Notes for examples of eligible technologies.