Phase 2 Scotland’s Public Sector Heat Decarbonisation Fund

Welcome to Phase 2 of Scotland’s Public Sector Heat Decarbonisation Fund, launched on behalf of the Scottish Government in March 2025.

Scotland’s Public Sector Heat Decarbonisation Fund will provide grant funding for local authorities, universities and arms-length external organisations to progress whole building approach projects that decarbonise heating systems and improve the overall energy performance of their buildings. 

The Scottish Government has made grant funding available within this financial year for projects to decarbonise their heating systems. This will allow organisations to implement clean heating systems, and for retrofit energy efficiency measures to support the overall decarbonisation of heat in buildings. 

Please have a look at our documents below to discover more about the fund, including eligibility and criteria. 

Scotland’s public sector buildings account for around 2.5% of the country’s greenhouse gas emissions. We must therefore reduce emissions from 23,000 public sector buildings to help end Scotland’s contribution to climate change by 2045.

At Salix we’re committed to working with the public sector to decarbonise and transform Scotland’s buildings. We are proud to be delivering this fund on behalf of government. It is designed to help organisations take early and sustained action to decarbonise the public sector estate and improve the energy performance of all public buildings.

Scotland’s Public Sector Heat Decarbonisation Fund has two strategic objectives:

• To support projects that will replace existing polluting heating systems with clean heating systems.
• To support energy efficiency projects where they can demonstrate that they are part of a whole building retrofit approach or broader strategy for heat decarbonisation, including connections to heat networks.

There are some changes that have been made to Phase 2 of Scotland’s Public Sector Heat Decarbonisation Fund. Please have a look at the guidance notes, below, for full explanation of this grant. The main changes are;

• The scheme is launching and looking for projects delivering in financial year 25/26.
• Concept applications have been removed from Phase 2.
• Each assessment criteria must achieve a minimum score of 65%. 
• There has been an update of some key terminology. Zero Direct Emission Heating system (ZDEH) is now referred to as clean heating system (CHS), and fossil fuel systems are now referred to as polluting systems. 

Multiple buildings, measures and/or projects can be included in one application provided that the application is compliant with the criteria.

Applications for capital projects that can be delivered by 31 March 2026 are welcome.

Applications will follow a single assessment approach, and if successful will have capital funding confirmed via a Grant Offer Letter.

Public sector bodies that are subject to the Public Bodies Duties in the Climate Change (Scotland) Act 2009 are eligible to apply for this grant. These organisations remain subject to the existing procurement rules such as the Public Contracts (Scotland) regulations 2015. 

Eligible bodies include:

• Local authorities (this includes the local authority estate as well as any educational facilities within their ownership)
  • Please note schools will not be able to make a separate application; this should be covered within the relevant local authority’s application.
• Local authority arms-length external organisations 
• Please note: these bodies should take a strategic approach to their whole estate and ensure that the same sites are not included in applications submitted by both the Local authority arms-length external organisations and their parent local authority
• Universities

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

• Private sector organisations   
• Public bodies classified by the Office for National Statistics (ONS) as Scottish central government: NHS Health Boards, further education colleges and central government departments 
• Integrated joint boards and integrated partnership organisations will not be able to make a separate application(s) in isolation from the public sector organisation they are integrated with
• Public corporations  
• Registered charities 

For more information, please refer to the guidance notes, attend one of our webinars and contact our Scotland team at [email protected] for any queries you may have. We look forward to hearing from you.

• Launch: 26 March, 2pm, 2025
• Application portal opens: 29 April, 2pm, 2025
• Application portal closes: 27 May, 2pm, 2025
• Applications assessments: May/July 2025
• Grant Offer Letters distributed: August 2025
• Webinars: 3 April at 2pm, 9 April at 11am, 16 April at 2pm, 1 May at 11am, 22 May at 11am. 
  • Note the times of 11am and 2pm.