The latest phase of the Public Sector Decarbonisation Scheme (PSDS) is set to open in October 2023, giving public sector bodies the chance to fund energy efficiency and low carbon heating upgrades across their estates.  

Heat decarbonisation is one of the major hurdles to net zero, with the majority of public sector buildings still reliant on fossil fuels. But it’s also an area of huge untapped potential. For more than 20 years, Fleetsolve has been helping public sector bodies decarbonise via renewable combined heat and power (CHP), including universities, colleges, schools, hospitals, prisons and council buildings.

PSDS provides the perfect opportunity for more organisations to make the switch – and we can help you apply.  In this blog post, we delve into the details of this latest funding round, how you can get started with renewable CHP.

Fleetsolve CEO, Keith O’Connor will be an expert panelist on NW Net Zero Hub’s PSDS Awareness and Readiness Webinar at 10am on Wednesday September 13th. Register here. 

What is the Public Sector Decarbonisation Scheme?

Managed by non-departmental public body Salix, the PSDS offers funding for projects geared towards decarbonising heating systems and enhancing energy efficiency in public sector structures. The scheme specifically targets those with aging fossil-fuelled heating systems that are nearing the end of their functional life.

Phase 3c of the scheme has launched, earmarking £230 million for allocation to various public sector organisations.

Renewable CHP as a funded technology

CHP is a highly efficient process that captures and utilises the heat that is a by-product of the electricity generation process. It typically has an efficiency of over 80%, which is significantly higher than the typical 50% efficiency of grid electricity and a gas boiler. These energy reductions equate to large savings in costs.

While traditionally associated with fossil fuels, CHP can also be 100% powered by renewable fuels, including bio-liquids, biogas and hydrogen. CHP is a reliable off-grid solution that ensures operational resilience, black-start capability, and adaptability to fluctuating heat and power demands. 

Prestigious accolades have been awarded to Fleetsolve’s CHP and integrated solutions, including the UK Project of the Year by RICS and a BREEAM Award for the best Design Stage Public Sector Project. These awards showcase the sustainability excellence of the Erne Campus in Northern Ireland – which is powered by a 100% renewable CHP unit. The biofuel is locally sourced and is made from the by-products of local agricultural processes, that would have otherwise gone to waste.

Eligible entities for PSDS Funding

The following categories of public sector bodies are eligible to seek funding through the PSDS:

1. Central government departments and affiliated bodies

2. Emergency services

3. Further and higher education institutions

4. Local authorities

5. State education system-maintained schools, including academies, Multi-Academy Trusts, and free schools

6. Local authority-maintained nursery schools

7. NHS Trusts and Foundation Trusts

Approved projects under the PSDS scheme

To be considered for PSDS funding, projects must involve the replacement of fossil fuel heating systems (e.g., gas boilers) with low carbon heat sources. Moreover, the existing heating systems must be approaching the end of their useful life.

Furthermore, projects may include energy efficiency enhancements, such as the incorporation of building management systems, insulation, and metering. This comprehensive approach ensures that energy efficiency is optimised before implementing low carbon heating solutions, leading to a more effective decarbonisation process.

Key focuses of Phase 3c include:

Sector Soft Caps: These caps, as implemented in Phase 3b, are retained in Phase 3c to ensure equitable distribution of funds across sectors like Health, Education, and Others. Sectors receive allocations ranging from 30% to 35% of the total Phase 3c funding, with allocations based on a first-come-first-served approach.

Multi-Year Applications: Just like previous phases, Phase 3c allows projects to span two financial years for greater flexibility.

Planning Year: Applicants can seek funding for projects with expenses in 2025/26 while using 2024/25 as a planning year.

Applicant Contribution: Applicants are expected to contribute at least 12% of total project costs, equivalent to like-for-like costs of replacing their existing heating system.

‘Whole Building’ Approach: Energy efficiency measures are funded only if they pertain to the building heated by the proposed low-carbon heating installation.

Energy Efficiency Cap: To prioritise heat decarbonisation, a cap limits the proportion of the grant value that can be allocated to energy efficiency measures.

Hybrid Heating Systems: Phase 3c doesn’t support projects incorporating new fossil fuel boilers. Low carbon heating systems are expected to fully replace end-of-life systems.

Grant Start Date: Work on projects can commence as soon as the grant offer letter is accepted, even before March 31, 2024.

Critical dates and deadlines

Phase 3c of the Public Sector Decarbonisation Scheme will accept applications starting October 2023 (exact date to be confirmed). The application portal will remain open for 10 days or until the budget threshold is met.

Applications can be made for funding in the following ways:

1. Solely for the financial year 2024/25

2. Solely for the financial year 2025/26, using 2024/25 as a planning year

3. Spanning both financial years

Projects should be completed within the final financial year for which funding is allocated.

The application form for Phase 3c can be downloaded from Salix’s website.

How Fleetsolve can help

Fleetsolve’s renewable CHP units are helping to decarbonise many of the UK’s public sector buildings, including schools, colleges, universities, NHS sites and His Majesty’s Prison Services. We can help you understand whether renewable CHP is right for you, and help you develop a project scope that meets the requirements of PSDS.


> System Design
> Manufacture
> Installation
> Integration with other Renewable Technologies
> Commissioning
> Fuelling Supplier
> Remote 24/7 Monitoring
> Fully Warranted Servicing & Maintenance
> UK Inventory of OEM Parts Supply

We can operate the full turn-key solution, or any of the individual elements – but whatever your requirement, we can help you benefit. Fleetsolve has vast experience of successfully partnering with local authorities or their nominated consultant partners. 

Let’s talk.

Call – 0151 353 2870
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