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Salix PSDS Phase 2 Announcement

22nd March 2021

Salix PSDS Phase 2 Announcement

On 17th March 2021, Salix announced Phase 2 of the Public Sector Decarbonisation Scheme (PSDS). However, this is not a simple extension of the previous scheme. The eligibility and assessment criteria are significantly different to Phase 1. Applications open on 7th April.

What is it?

  • This is Phase 2 of the PSDS scheme. Following on from the £1bn Phase 1. This time the fund is “only” £75million.
  • On 17th March, Salix also published the bodies receiving funding from Phase 1. The total value of the projects funded was £932million so this Phase 2 appears to be the residual from the original £1bn fund rather than new money.

What are the timescales?

  • The new application portal opens 7th April 2021. 
  • Projects must be delivered by 31st March 2022. 

What’s different from Phase 1?

  • In short, a lot! The fund is significantly different from Phase 1. It will not be possible to simply resubmit bids from Phase1.
  • The Phase 2 process is much more tethered towards decarbonisation of heat projects. Any new application must include a project that decarbonises part or all of the heating within a building
  • The grant will only fund the additional/marginal cost of implementing the low carbon solution. The academy/trust will be responsible for the “like for like” cost of replacement.
  • The existing system must be fossil fuel based
  • The existing heating system must be coming to the end of its useful life.
  • There is a maximum grant value of £5million per application.
  • The Carbon Cost Threshold (CCT) has been reduced from £500 to £325/tCO2eLT

What’s the same?

  • You can still bundle other technologies (such as Solar PV or LED lighting)  as part of a “whole building” approach, where they are supporting the heat decarbonisation bit.
  • These supporting technologies will be 100% grant funded.
  • The fund is open to the whole public sector.
  • Applications will be assessed on a first come first served basis.
  • The additionality criteria are the same i.e. the project must not have already started.

Can we bid for other energy saving measures? 

  • Yes. It is possible to append other technologies to the main heat decarbonisation project where it supports the delivery of the core scheme. For example Solar PV to offset the additional electrical load from an air source heat pump.
  • However, the carbon savings form these technologies cannot be used to compensate for shortfalls in the carbon calculations of the core project as previously.
  • In order to meet the revised cost per tonne of carbon saved benchmarks, it is likely that a financial contribution will be required from the bidder to make the application compliant with the new CCT.

The results of the PSDS Phase 1 make interesting reading. Nearly 90% of the total fund was allocated to Local Authorities and NHS. Many of these organisations have been granted extensions to September to deliver their projects.

£31 million was allocated to the schools/academies sector. At Barker we supported our clients in securing over £10million of this.

What do we do next?


In summary, there appears to be an opportunity to leverage the information gathered during the LCSF/PSDS process to make some further targeted applications, however careful consideration will need to be given to identifying suitable projects and looking at the match-funding elements which significantly shift the commercial proposition.

  • Have you got a heating system at the end of its useful life?
  • Were you intending to replace the system in the next 1-3 years?
  • Do you have the funds to carry out a “like for like” replacement?

If so, we may be able to assist in building a new bid around this. It will be necessary to obtain costs for replacement as well as alternative low-carbon solutions and calculate the potential carbon savings. We will also look at the whole building/site to ascertain what complementary technologies could be bundled with the heating replacement scheme.

If you would like to discuss your project, please contact us