The next phase of the Public Sector Decarbonisation Scheme (PSDS) has been announced, giving public sector bodies the chance to fund energy efficiency and low carbon heating upgrades across their estates.

In line with the scheme’s strong focus on heat decarbonisation, renewable CHP has been eligible for PSDS funding in previous rounds. 100% fuelled by bio-liquids, biogas, bio-LPG, rDME or hydrogen, renewable CHP is an off-grid solution that provides a reliable source of heat and power, underpinning the quest for energy security, delivering onsite decarbonisation and acting as an enabling technology within the energy transition journey.

While we don’t yet have the full Phase 4 guidance (due in summer 2024), it is likely that this low carbon heat source will continue to be supported. Fleetsolve is looking forward to helping organisations secure funding for renewable CHP, and we will update you with further details when they become available.

Funding pot

The scheme will continue to be delivered by Salix, and there is, in total, £1.17 billion funding allocated for public sector decarbonisation. It follows a profile of £670 million in 2025/26, £300m in 2026/27 and £200m in 2027/28.

Up to £335 million for 2025/26 is being awarded in grants for the previous phase (Phase 3c). Salix is currently allocating this funding and Grant Offer Letters are now being distributed.

The majority of the remaining funding will be allocated to Phase 4 of the PSDS.

New for Phase 4: targeted allocation process

One of the biggest differences for Phase 4 will be the grant allocation process.

While applications for Phases 1, 2 and 3 of the scheme have been awarded grants in the order in which they were received, the government has confirmed that applications received under Phase 4 will be assessed through a targeted allocation process.

This means funding will be allocated towards projects delivering the best value for money with the most direct carbon emission reductions. Given the direct and tangible carbon reductions which are audited by the ISCC and directly measurable utilising Fleetsolve’s tracking technology, this places renewable CHP at the forefront of this funded opportunity.

Help and advice

Salix will publish the Guidance Notes for Phase 4 of the Public Sector Decarbonisation Scheme during summer 2024.

In the meantime, if you’d like advice on securing funding for renewable CHP or would like to know whether it’s right for you, get in touch with Fleetsolve.

For more than 20 years, we’ve been helping public sector bodies decarbonise their heat and power across multiple award-winning programmes – including universities, colleges, schools, hospitals, prisons and council buildings.

Get in touch on 0151 353 2870 or

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