Phase 3c of the Public Sector Decarbonisation Scheme announced, £590million of Phase 3b funding now committed

The latest funding round from a scheme to provide grants to public sector bodies to fund low-carbon heating, renewable energy and energy efficiency measures, has been announced today.

Salix Finance has announced that HM Government has made available through Phase 3c of the Public Sector Decarbonisation Scheme, up to £230m for projects for financial year 2024/25 with additional budget for financial year 2025/26 provided to the scheme to enable projects to be delivered over two years.

Guidance documents, including Guidance Notes, Application Form, Applicant Journey and Privacy Notice, are now available for prospective applicants to download and complete before the Application Portal opens in autumn 2023.

The scheme provides grants to public sector bodies to fund low-carbon heating, renewable energy, and energy efficiency measures such as heat pumps, solar panels and insulation. 

The announcement of Public Sector Decarbonisation Scheme Phase 3c coincides with the latest update on the total Phase 3b funding that has been committed. Phase 3b of the scheme opened on 12 October 2022 and closed to applications on 31 October 2022.

In March 2023, the Department for Energy Security and Net Zero announced the first tranche of grant recipients who had been successful in applying for funding through Phase 3b, awarding £409m to public sector bodies to decarbonise vital public buildings including schools, hospitals and community and leisure centres.

Since March, a further £181m has been allocated bringing the total for Phase 3b funding now allocated to £590m. 190 public bodies have been awarded funding to support 229 projects to install low-carbon heating alternatives and new energy efficiency measures. For a list of grant recipients see gov.uk

Many applicants for Phase 3b of the Public Sector Decarbonisation Scheme initially received funding from the Low Carbon Skills Fund.

The Low Carbon Skills Fund has made £66m of grant funding available to public sector organisations since 2020 to secure the specialist support needed to design and deliver heat decarbonisation projects on their estates. This includes heat decarbonisation plans, detailed project designs and project development and delivery support.  Many applicants have used these plans as the basis for their Public Sector Decarbonisation Scheme applications.

A total of £17m was made available through the latest round of Low Carbon Skills Funding, Phase 4, which opened to applications on 26 April 2023 and closed on 28 April 2023. The fund has now been allocated and a list of successful grant recipients will be made available on gov.uk

The Public Sector Decarbonisation Scheme supports the Government’s commitment to reduce emissions from public sector buildings by 75% by 2037, compared to 2017 levels, as first set out in the Government’s 2021 Heat and Buildings Strategy. 

Assistance to some public sector bodies in funding their projects is also available for the first time from the UK Infrastructure Bank as part of its mission to tackle net zero and support regional and local economic growth.

Applicants to Phase 3c of the PSDS eligible for a loan from the UK Infrastructure Bank will have the option of accessing the Bank's capital to borrow funds at preferential rates to support their decarbonisation projects. For more information visit www.ukib.org.uk/uk-infrastructure-bank-supports-public-sector-decarbonisation-scheme

Lord Callanan, Minister for Energy Efficiency and Green Finance, said: 

“Achieving net zero means the public sector taking action too. The launch of application material for the next round of Public Sector Decarbonisation Scheme funding, Phase 3c, announced today will allow public sector bodies – from schools to NHS Trusts – to start designing their funding bids for ambitious decarbonisation plans that will ultimately save the taxpayer hundreds of millions while packing a punch on our ambitious and necessary climate goals.”