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Public Sector Decarbonisation Latest Funding Phase

The UK Public Sector Decarbonisation Scheme (PSDS) is a government-funded program designed to support the UK’s net zero emissions target by 2050 by providing grants to public sector bodies to help them decarbonise their buildings. This is important as most of the buildings in the public sector still rely on burning fossil fuels for heating, hot water, and catering. 

Phase 1 and Phase 2 of the PSDS have been successful in helping to decarbonise public sector buildings in the UK. The schemes have awarded over £1.75 billion in grants to over 1,300 public sector bodies, which have helped to decarbonise more than 2,000 public buildings. These projects have resulted in a reduction of more than 1.25 million tonnes of carbon emissions.

Who can use the PSDS?

The scheme is open to a wide range of public sector bodies, and it provides significant financial support for decarbonisation projects. If you are a public sector body that is looking to reduce your carbon emissions, the PSDS is a great option to consider.

The PSDS is open to all public sector bodies, including central government departments, local authorities, schools, hospitals, police forces, fire and rescue services and other public buildings.

The PSDS has been a successful program so far. In Phase 1, which ran from 2020 to 2022, the scheme awarded over £1 billion in grants to more than 1,000 public sector bodies. These grants have helped to decarbonise more than 1,500 public buildings, resulting in a reduction of over 1 million tonnes of carbon emissions.

Phase 2 of the PSDS, which ran from 2021 to 2022, awarded £75 million in grants to a further 300 public sector bodies. These grants have helped to decarbonise more than 500 public buildings, resulting in a reduction of a further 250,000 tonnes of carbon emissions.

Why should public sector bodies apply for funding?

There are a number of reasons why public sector bodies should apply for funding from the PSDS. These include:

  • Helps reduce fossil fuel emissions as well as making public buildings more comfortable and cheaper to warm. 
  • To reduce their carbon emissions and help the UK reach net zero.
  • To save money on energy bills.
  • To improve the energy efficiency of their buildings.
  • To create jobs in the low-carbon economy.
  • Gain ongoing client and technical support on project delivery. 

Phase 3c of the PSDS

Phase 3 of the Public Sector Decarbonisation Scheme, worth £1.425bn, was launched on behalf of the Department for Energy Security and Net Zero in 2021 to supply grants to public sector bodies over the period 2022 to 2026. Phase 3c of the PSDS was launched this month.

For Phase 3c of the PSDS, an additional financial year of funding has been granted by the Department. This funding increases the value of the overall funding to the scheme and will enable Phase 3c projects to deliver across two financial years.

Phase 3c of the Public Sector Decarbonisation Scheme has up to £230 million available in 2024/25. The budget available in 2025/26 will be confirmed this autumn though applicants should assume a broadly balanced profile across 2024/25 and 2025/26.

The Application Portal for Public Sector Decarbonisation Scheme Phase 3c is expected to open in the autumn and comes with soft sector caps (divided by Health, Education and Other) to ensure a more balanced distribution of funds across sectors. 

Applicants can submit separate applications for separate projects or combine several projects for delivery across one or two financial years. Applicants can also include energy efficiency measures and other enabling works, that are additional to the replacement of the fossil fuel heating system, where they support a whole-building approach to decarbonisation. 

To apply for Phase 3 funding visit the PSDS website or visit Adveco’s Net Zero resources to understand how funding can be used to support decarbonisation projects that deliver results today. For public sector buildings with gas-fired systems please talk to us about metering your buildings to understand how low-carbon technology can be successfully used to lower carbon emissions without excessively driving up capital funding.