Phase 4 of the Public Sector Decarbonisation Scheme (PSDS) has been announced, along with plans to move away from the current grant allocation process. This quick guide will highlight key changes in the new phase of the PSDS.

On 29 February, the government confirmed Phase 4 of the Public Sector Decarbonisation Scheme. The PSDS, made up of three previous phases, allocates grants to help public sector bodies in England invest in heat decarbonisation and energy efficiency.

In December 2023, £1.17bn of funding for public sector decarbonisation was confirmed:

  • £670 million available in 2025 to 2026
  • £300 million in 2026 to 2027
  • £200 million in 2027- 2028

Up to half of the funding from 2025 to 2026 (£335m) could be directed to the second year of Phase 3c. Salix, a non-departmental government body, is responsible for the funding and is currently distributing Grant Letter Offers.

The majority of remaining funding will go to Phase 4 of the PSDS, with another proportion allocated to the Trailblazer deals with the Greater Manchester Combined Authority and the West Midlands Combined Authority.

What’s changing in Phase 4 of the PSDS?

One of the biggest shifts in Phase 4 will involve the method of allocating funding. Whereas current grants for Phases 1, 2, and 3 were offered on a first come first served basis, Phase 4 will transition to a more targeted means of selecting recipients, ensuring that emissions are being cut as effectively as possible. Projects that are “delivering the best value for money based on the most direct carbon emissions reductions” are the ones that will receive highest priority.

Salix has stated, “We believe that this will target funding towards high-quality projects that contribute most to the scheme’s carbon-saving goal.”

More information about Phase 4 of the Public Sector Decarbonisation Scheme will be announced in summer 2024.

For the latest PSDS news, be sure to keep an eye on the Energy Advice Hub and subscribe to our LinkedIn newsletter.

If the content of this or any of our articles has interested you, please get in touch for a no-obligation chat with our industry-leading experts at Sustainable Energy First.