Public Sector Decarbonisation Scheme

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.

Carbon cost-effectiveness scoring

The primary scoring metric for PSDS applications is carbon cost-effectiveness: £ of total public investment (grant + any other public funding) per tonne of CO2 equivalent saved over 20 years. Projects with more carbon savings per £ of grant requested score more highly. Solar PV projects are typically in the £80–£200/tCO2e range. Combined solar + heat pump projects score more strongly (£60–£120/tCO2e) because heat pumps save more carbon per £ deployed. Projects at the high end of the carbon cost-effectiveness range (>£200/tCO2e) are unlikely to be competitive in a well-subscribed round.

Grant intensity: up to 67% of eligible capital cost

PSDS awards have ranged from 50% to 100% of eligible capital cost in previous phases, with the most recent PSDS Phase 4 guidance indicating up to 67% as the standard maximum for solar-only projects. Projects with higher carbon savings or serving more deprived communities may attract higher grant percentages. The grant cannot be "stacked" with other government capital grants for the same measures — if a project receives other public capital (e.g., UKIB loan at concessionary rate), the PSDS grant must be reduced to avoid double-funding the capital cost.

Eligible costs

PSDS eligible costs include: solar panels, inverters, mounting systems, electrical balance of system, battery storage co-located with solar, monitoring hardware, installation labour, commissioning, DNO connection application (not DNO reinforcement work), project management (up to 10% of eligible capital), and quantity surveyor fees. PSDS does not fund: roof repairs, structural surveys (unless essential and directly attributable), consultant fees above 10% cap, or operational costs.

Pre-application stage (3–6 months before application window opens)

Good PSDS applications require: a detailed energy audit of each building (ASHRAE Level 2 or equivalent); a system design with PVsyst or equivalent yield model; a structural survey; a draft O&M and monitoring plan; and procurement route confirmation (framework vs open tender). Engaging a specialist PSDS application consultant at this stage typically improves application quality significantly — consultants familiar with DESNZ scoring criteria can identify weaknesses and augment the carbon saving calculation.

Application submission (window typically 6–10 weeks)

Applications are submitted through the DESNZ Grant Management System. The application requires: project description and building details; carbon saving calculation (must use DESNZ's approved methodology — downloadable calculator); full cost breakdown; existing capital commitments and other funding sources; procurement plan; programme (Gantt chart showing delivery within the grant period); and sign-off from the organisation's responsible officer.

Grant agreement and delivery (18–24 months from award)

PSDS awards come with a grant offer letter specifying the maximum grant, eligible costs, milestones, and completion deadline. The programme deadline (typically 18–24 months from award) is firm — extensions are rarely granted. The DNO connection timeline is typically the critical path: G99 applications for NHS or school estates with multiple sites can take 12–18 months in constrained grid areas. Plan the DNO application immediately on award.

PSDS scoring: why solar-only applications are at a disadvantage

PSDS rounds score applications primarily on cost-per-tonne of CO2 saved over the project lifetime. A solar-only project on a gas-heated building saves electricity-related emissions but does not address the much larger heating carbon footprint. A combined solar + heat pump + fabric project saves 3–5x more CO2 for a similar total grant cost, scoring significantly better. Public sector estates that can bundle measures — and present them in a single PSDS application — consistently achieve higher grant rates and stronger application success rates.

Multi-academy trust PSDS strategy

MATs with 8+ schools can achieve a fundamentally different economics than single-school applications. A portfolio of schools spread across a county, each with 30–80kWp of roof solar, often totals 500kWp–2MWp of combined capacity — large enough to negotiate a programme-level contract with an installer (reducing per-kWp cost by 10–15%) and presenting a compelling portfolio application to PSDS. We have supported MAT applications where 75–80% capital grant funding was achieved across an entire trust estate.

Salix 0% interest loans for unfunded balance

Where PSDS does not cover 100% of project cost, Salix Finance's interest-free loan programme covers the unfunded balance for eligible organisations. Salix loans are repaid from verified energy savings — typically over 5–10 years — and are interest-free. For an NHS trust receiving 70% PSDS grant on a £500k project, the unfunded £150k would be financed via Salix at 0% interest, repaid from the £60k–£80k annual energy saving over 2–3 years.

How to check if your organisation is PSDS-eligible

Step 1: confirm your organisation is a 'public sector body' as defined by DESNZ (Department for Energy Security and Net Zero). Step 2: check the PSDS eligible organisations list published on GOV.UK with each new round — the list changes between rounds. Step 3: confirm the building is owned (not leased from a private landlord) and is non-domestic and non-residential. Step 4: confirm the project has a clear carbon reduction impact — PSDS does not fund solar on buildings already decarbonised. If in doubt, contact Salix Finance (the delivery partner) directly: they can confirm eligibility before you spend time on an application.

PSDS + Salix worked example: 350kWp NHS Trust installation

Eligible project cost: £300,000. PSDS grant (70%): £210,000. Salix interest-free loan (30%): £90,000. Net capital outlay from NHS Trust: £0. Annual energy saving: £47,000 (350kWp at 950 kWh/kWp, 35p/kWh commercial rate + grid import avoided). Annual Salix repayment (10-year term): £9,000. Net annual cash saving to Trust from year 1: £38,000. Salix loan fully repaid from energy savings alone in 2.4 years. Total lifetime (25yr) net saving to Trust: £1.075m. Carbon reduction: 62 tonnes CO²e/year.

Common reasons PSDS solar applications are rejected

(1) Building is leased from a private landlord — PSDS requires public sector ownership. (2) Project was started before application was submitted — PSDS requires project to be 'not yet started' at point of grant offer. (3) Energy audit was not at the required standard (Level 2 or above). (4) Installer is not MCS-accredited. (5) Carbon savings are insufficient — small systems on low-consumption buildings score poorly. (6) Application submitted after the round closed. (7) PSDS round was oversubscribed and only highest-scoring applications funded. (8) Building is primarily residential (use SHDF instead). Address points 1–6 before applying — only point 7 is outside the applicant's control.