Public Sector Decarbonisation Scheme
Capital grant scheme for public-sector estates funding solar PV alongside heat decarbonisation and energy efficiency.
Phase 3 funding rounds have funded up to 100% of qualifying capital cost for integrated decarbonisation projects, although recent rounds have prioritised projects with the strongest carbon-saving-per-pound metrics. Solar-only projects compete less well than solar-plus-heat-decarb projects.
Awarded in time-limited funding rounds. Recent rounds: Phase 3a, 3b, 3c. Future rounds depend on Treasury funding settlements — currently funded through 2028.
In detail
PSDS is the most significant grant funding route for public-sector solar in 2026. The scheme is administered by Salix Finance on behalf of DESNZ and provides capital grants for decarbonisation projects on public-sector buildings. Recent funding rounds have totalled £200m–£500m per round, with successful applicants typically receiving £100k–£10m+ per project. The scheme rewards integrated decarbonisation: applications that bundle solar PV with heat pumps, fabric improvements, and lighting upgrades score better than solar-only proposals because the per-tonne-of-CO2 cost-effectiveness is higher. For public-sector estates with viable solar potential, the strategic move is to align solar investment with heat decarbonisation timing — apply to PSDS for the combined project, capture the grant, and deliver both measures together. We have supported PSDS applications for multi-academy trust portfolios where 8–15 schools have been bundled into a single application, capturing 75%+ grant funding across the portfolio. Application work is intensive — expect 80–150 hours of effort to develop a robust submission for a portfolio scheme — but the funding outcome is materially valuable.
Who qualifies
Central government departments, NDPBs, NHS trusts, local authorities (councils, fire and rescue, police where applicable), state-funded schools and academies, further and higher education institutions, and most public-sector bodies with a delivery responsibility for energy use in their estate.
What it does
Provides capital grant funding for combinations of energy-efficiency measures, heat decarbonisation, and on-site renewables (including solar PV) on public-sector buildings. Awarded competitively through funding rounds administered by Salix Finance.
Worked example
On a £200,000 250kWp solar project bundled with a £400,000 heat pump retrofit at a school: total project £600k. PSDS typically funds 75%–100% of qualifying spend on such bundled projects. Net cost to the school: £0–£150k. Solar generation alone saves £35k–£42k per year. Heat-decarb saves further on gas spend.
Tax treatment / process
- Pre-engagement with Salix and Carbon Trust to confirm eligibility and approach
- Develop detailed business case including carbon savings, energy savings, total project cost, and delivery plan
- Submit full application via the Salix portal during an open funding round
- Award decisions typically 8–16 weeks after round closure
- Delivery within tight grant timescales (often 12–18 months from award)
- Submit completion evidence and claim grant against actual spend
Pitfalls to watch
- Highly competitive — application quality matters enormously
- Solar-only projects rarely score well; bundling with heat decarbonisation is almost essential
- Tight delivery deadlines — projects need to be procurement-ready at application stage
- Procurement compliance (PCR 2015) for any spend above thresholds
- Grant clawback risk if performance significantly under-delivers vs application
- Funding rounds can pause or change scope between announcements
Best paired with these finance structures
Run the numbers on your project
We build the after-tax model with the right reliefs applied — no missed deductions, no double-counted benefits.
Request a finance review