PSDS Phase 4: the three patterns in funded applications

The PSDS Phase 4 application window ran from 9 October to 25 November 2024, and the scheme announces no further round. The same three patterns separated funded applications from unsuccessful ones as in Phase 3 — and they had less to do with technology choice than with how the business case was framed.

The cost-per-tonne metric is everything

PSDS scoring was dominated by cost-per-tonne-of-CO₂-saved over the project lifetime. Solar-only applications struggled there because, on a per-tonne basis, solar is one of the more expensive decarbonisation options for an organisation already operating on partly-decarbonised grid electricity. A 2026 marginal grid carbon factor of 0.18 kg CO₂/kWh means that even a high-yielding solar project saves only ~180 tonnes per MWp per year — and per pound of capex that is a smaller carbon saving than measures that replace gas heating.

Bundled applications won. A solar + heat pump + fabric efficiency package on the same site delivered better cost-per-tonne because heat pumps replaced direct gas use (CO₂ factor ~0.21 kg/kWh), where the savings per pound spent were stronger.

What worked in Phase 4

Bundle structure. Successful applications generally included solar PV + air-source heat pumps + LED relighting + BMS + roof insulation as a single package, with the heat pump driving the cost-per-tonne metric and solar offsetting the heat pump's grid load. Solar standalone applications won only on sites where the heat is already decarbonised (electric heating in a school, for instance).

Real demand modelling. Applications that referenced half-hourly demand profiles, not annualised consumption, made a stronger case because the assessor could verify self-consumption assumptions.

Specific carbon counterfactual. The strongest applications nominated a specific grid emissions factor with a year-by-year decarbonisation trajectory drawn from the National Grid FES Net Zero scenario, rather than a flat assumption. This shifts the lifetime CO₂ savings calculation noticeably.

Maintenance and end-of-life. Applications that costed 25 years of operation and maintenance, not just installation, made a stronger case.

What weakened a bid

Cost per tonne above the threshold. Phase 4 assessed the carbon cost of each bid against a threshold set in its guidance. Solar-only projects struggled to clear it without unusual local circumstances (e.g. very high tariffs, very large sites with constrained grid alternatives).

Insufficient client-side capability. Applications from bodies with no clear delivery resource made a weaker case; a named project sponsor, internal procurement capacity and a credible plan from engagement to completion made a stronger one.

Generic technical specification. Boilerplate solar specifications without site-specific structural and DNO assessment made a weak case; applicants were expected to show evidence of site survey work.

What it meant for public-sector planning

For schools, NHS trusts and local authorities, the Phase 4 pattern was: lead with heat decarbonisation, anchor on cost per tonne, and treat solar as the complementary measure rather than the headline. Where heat was already electric, solar could lead; in a building with significant gas heat use, the heat pump was what won the bid. Portfolio bids also helped, because one package across several sites spread the overhead. Phase 4 has closed, so this is a record of how bids were judged, not a route open today.

Timeline

The Phase 4 application window ran from 9 October to 25 November 2024. It is closed, no further round has been announced, and in June 2025 the government said it would fund no projects beyond those already awarded (Salix, 12 June 2025).