Public Sector Solar Funding
Reviewed by the Commercial Solar Finance editorial team (we take no installer or lender commissions). Last reviewed: October 2026.
Public bodies had the strongest funding position of any organisation installing solar in the UK while the Public Sector Decarbonisation Scheme was open. PSDS closed to new applications in November 2024 and Phase 4 is its final phase; England has no Salix loan for solar. This hub sets out what an NHS trust, council, school or university can still use — the open Scottish and Welsh loan schemes, capital budgets, and zero-upfront routes such as a PPA or lease — and who qualifies.
Public sector solar funding in brief
The core route was PSDS: grants that covered most of the capital, heat-led, administered by Salix. PSDS closed to new applications in November 2024 with no successor announced, and England has no Salix loan for solar. English bodies now fund solar from capital budgets or at zero upfront cost through a PPA or lease; Scotland and Wales run their own open loan schemes. Below: every route and its 2026 status.
Realistic expectations (checked 3 November 2026): PSDS closed to new applications in November 2024 and Phase 4 is final. Outside England, Scottish public bodies can borrow from Salix's zero-interest Scottish Public Sector Energy Efficiency Loan Scheme, and Welsh bodies through the Wales Funding Programme at a fixed 2.45% (interest-free only on the Invest to Save route). In England, an operating lease or a PPA is the no-capital route.
Public sector solar funding routes compared
| Scheme | Who for | Funding | Notes |
|---|---|---|---|
| PSDS (Public Sector Decarbonisation Scheme) | NHS, councils, schools, universities in England | Closed — no open window | Phase 4 (window October–November 2024) was the final round and no successor has been announced; heat-led, so solar was fundable only alongside a fossil-heating replacement |
| Salix Finance (England) | English public bodies | No loan for solar | Salix administers PSDS (closed to new applications since November 2024; delivery only) and the Low Carbon Skills Fund for DESNZ in England; its open loan schemes are Scottish and Welsh — see those rows |
| Scotland (Salix loan scheme; NDEEF procurement framework) | Scottish public bodies | Interest-free Salix loans; NDEEF is a procurement route, not a grant | Devolved — see Scotland grants |
| Wales (Welsh Government Energy Service) | Welsh public sector | Funded support + Salix Wales | Devolved delivery |
| UKSPF (local allocations) | Some local public & community bodies | Grant, varies | Check with the local authority |
How PSDS + Salix delivered zero-net-cost solar (closed November 2024)
While PSDS was open the combination was what made public-sector solar so compelling: PSDS covered up to ~80% of the capital as a grant, a Salix loan covered the balance, and the repayment was met from the electricity-bill saving. PSDS closed to new applications in November 2024, Phase 4 is its final phase and no successor has been announced, so the figures below record how the stack worked rather than a route a body can apply for today. A PPA or operating lease is the zero-upfront route still open in England; the capital allowances a trading company would claim do not help a non-tax-paying body, which is why the grant mattered so much.
| Project | PSDS grant (80%, historic) | Salix 0% loan (20%, historic) | Net upfront cost |
|---|---|---|---|
| Hospital 250kWp / £300k | £240,000 | £60,000 | £0 |
| School 50kWp / £60k | £48,000 | £12,000 | £0 |
| University 1MWp / £1.2m | £960,000 | £240,000 | £0 |
Getting public sector solar funding: the route
PSDS ran in competitive rounds with specific application windows, and bids needed a carbon baseline, contractor quotes and a cost-per-tonne-CO₂ business case — on which solar alone often struggled. The record of what Phase 4 required is on our PSDS eligibility and application page, useful if a successor scheme is announced; NHS bodies should also see the NHS solar finance guide. Today the live routes are a body's own capital programme, a PPA or lease, and the devolved schemes.
Related public-sector guides
Why public bodies are in the strongest position
A private business funding solar relies on tax relief and energy savings to make the numbers work. A public body had those plus a grant covering most of the capital while PSDS was open. That was a structural advantage no commercial structure could match: where a company might see a five-to-seven-year payback, a PSDS-funded public project could be cash-flow positive from year one, because the grant removed most of the capital and the loan that covered the rest was repaid from the saving itself. The constraint now is not economics — it is that the grant rounds have ended, which is why a PPA or lease has become the public sector's zero-upfront route in England.
What makes a strong public sector solar funding bid
PSDS bids were scored heavily on cost-effectiveness — the grant cost per tonne of CO₂ saved — and solar alone scored less well on that metric than heat-pump or fabric measures, which is why solar was usually bundled into a wider decarbonisation bid. A strong application paired a clear carbon baseline (from Display Energy Certificates or half-hourly data) with two contractor quotes and a Green Book-style business case for larger projects. No further PSDS window has been announced; a body that keeps its baseline and quotes current will be ready if a successor scheme opens, and can take the same evidence to a PPA provider or lessor now.
Our guides record what the final PSDS round required and how the funding stack worked against a body's estate. Start with PSDS eligibility and application, and for health bodies the NHS PSDS pathway.
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Start with public sector decarbonisation scheme eligibility — the two rules that catch applicants out are covered there.
For the private-sector picture, commercial solar funding compares the six routes and the nation-by-nation layers.
Plan your public sector solar funding
Check which routes still suit a public body: PPA, lease and the devolved schemes.
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