Scotland’s Public Sector Heat Decarbonisation Fund

Welcome to Scotland’s Public Sector Heat Decarbonisation Fund, launched by Salix on behalf of the Scottish Government in October 2023.

The Scottish Government has made £20 million grant funding available within this financial year under Scotland’s Public Sector Heat Decarbonisation Fund for projects to decarbonise their heating systems by replacing them with zero direct emissions systems, and for retrofit energy efficiency measures to support the overall decarbonisation of heat in buildings. Eligible organisations can apply for funding to support the delivery of their heat decarbonisation and/or energy efficiency project(s).

Many buildings rely on fossil fuel systems to fulfill heating, hot water, and catering requirements. The energy demand from these requirements is high and requires a strategic and targeted approach to reduce carbon emissions. Scotland’s Public Sector Heat Decarbonisation Fund supports this by supporting the introduction of zero-emissions heating systems, as well as encouraging a ‘whole building’ approach that implements energy efficiency measures to reduce a building’s overall energy demand.

Applications will undergo a quality-based assessment and the highest scoring applications will be approved for funding. The time of submission will have no impact on the assessment outcome, provided that the portal is not closed.

It is recognised that projects are at differing stages of development in terms of becoming capital ready, in line with the scheme’s eligibility criteria. Therefore, two types of applications will be offered;

Detailed Application

• Single assessment approach
• Capital funding will be confirmed via Grant Offer Letter (GOL) after a successful full assessment of applications

Concept Application

• Two-stage assessment approach
• Capital funding will be reserved based on the Concept Application demonstrating alignment with the scheme criteria
• Capital funding will be confirmed via Grant Offer Letter (GOL) at a later date pending submission of a Detailed Application and successful full assessment

Assessment of applications and allocation of funding will first consider Detailed Applications. Depending on the funding available Concept Applications will then be considered.

For more information on Detailed and Concept Applications, please refer to the Guidance Notes.

Applications will be assessed by Salix and their external contractors around the five following sections: Strategic Assessment, Technical Feasibility, Financial Feasibility, Project Deliverability, and Social Impact.

For further details on key dates and to clarify whether your organisation is eligible, please see below.

Decarbonising the way we heat our buildings has already been established as one of the biggest challenges in meeting the UK’s 2050 Net-Zero targets. Scotland has set an even more ambitious target than the rest of the UK to meet net zero emissions of all greenhouse gases by 2045 and is paving the way in terms of plans to source alternative systems to replace fossil-fuel based heating. However, the majority of buildings in the public sector still rely on traditional fossil-fuel boilers.

This scheme will provide capital funding for public sector organisations to carry out projects to decarbonise their heating systems and improve the overall energy performance of their buildings. In line with Scottish Government policy, applications should take a ‘whole building’ approach through the introduction of energy efficiency measures; to improve the energy efficiency of buildings as well as to ensure the optimal performance of their zero-direct emissions heating system.

Organisations eligible to apply to Scotland’s Public Sector Heat Decarbonisation Fund scheme include: 

• Arm's length external organisations (ALEOs) 
• Local authorities (this includes the local authority estate as well as any educational facilities within their ownership) 
• Universities 

Please note that the following organisations are currently not eligible for this scheme: 

• Public bodies classified by the Office for National Statistics (ONS) as Scottish central government; NHS Health Boards, further education colleges and  central government departments (these organisations can access the Scottish Central Government Energy Efficiency Grant scheme instead) 
• Public corporations 
• Private sector organisations 
• Registered charities 

• The initiative addresses the need to meet Scotland’s 2045 net zero emissions targets, by focusing on decarbonising the way buildings are heated.
• The scheme will help reduce direct fossil fuel emissions as well as make public buildings more comfortable.
• The scheme enables organisations to think more strategically about their decarbonisation plans and identify which buildings are deemed as a priority across their estates.
• Allocation of up to £20m of funding to public sector organisations to be spent within financial year 2023/2024. Applicants will be able to apply for up to £2.5m worth of funding to be utilised across both the 23/24 and 24/25 financial years.

Wednesday 25 October 2023 – Scheme announced and Guidance Notes published on the Salix website.

Tuesday 21 November 2023 – Scotland’s Public Sector Heat Decarbonisation Fund Application Portal opened at noon. Applications will be assessed based on application quality according to the five assessment areas: Strategic Assessment, Technical Feasibility, Financial Feasibility, Deliverability and Social Impact

Tuesday 5 December 2023 at noon – The Application Portal will close.

For successful Detailed Applications, Salix will award a Grant Offer Letter - subject to a fully completed and authorised application. It is expected that any Grant Offer Letters will be issued from February 2024 onwards.

Applicants with successful Concept Applications will receive a Reservation of Funding Letter (RFL). The Reservation of Funding Letter sets out the value of grant funding that has been reserved for the applicant to implement the capital works. The offer of capital funding is based on the condition that the applicant, at a later agreed date, submits a Detailed Application that successfully meets the scheme criteria and passes full technical assessment

Salix has created a brief video detailing Scotland's Public Sector Heat Decarbonisation Fund. In this video, Salix's Programme Coordinator, Zoe Hurst, talks about how the £20 million scheme will be delivered. You can view the video here.