Introduction to PSDS Funding

In this blog, we explore what PSDS funding is, who it benefits and how best to secure funding in the future.

Posted on Apr 19, 2022

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The Public Sector Decarbonisation Scheme (PSDS) is a government-backed scheme that looks to aim to help public sector bodies to lower their carbon footprint and reach their Net Zero goals. But how? Keep reading to find out more.


Firstly, what is PSDS and when did it launch?

Phase One of the Public Sector Decarbonisation Scheme (PSDS) launched in autumn 2020 as part of the government’s ‘Build Back Greener’ campaign

What is the scheme designed to do and what are its benefits?

The scheme set out to replace old, fossil-fuel technologies with more efficient, low or zero carbon technologies within public sector buildings.

The overarching benefit of PSDS is a low carbon future for the public sector. In practice, a local authority or school may want to replace their old heating system with a newer, more efficient technology, such as heat pumps or district heating connections.

This is where the PSDS funding comes in.

Has there only been one phase and can you still apply for funding?

There have been three phases of PSDS so far, and no, you’re not currently able to apply for funding on any of those phases.

All three phases have had their funding allocations met by applicants, seeing a total of £2.5billion granted to public sector bodies since Sept 2020.

For a bit of context:

Phase One was part of the Government’s ‘Build Back Greener’ campaign to get the reignite the economy and had £1 billion of funding for a multitude of green projects.

Phase Two’s funding pot was significantly smaller – at just £75 million – and was aimed at taking a ‘whole building’ approach to heat decarbonisation.

Phase Three’s pot then jumped back up to £1.425 billion, but that number was broken down in to short-, medium- and long-term projects, of which 85% of that total was aimed at those taking the shortest time.

Phase Three also requires that the public body receiving PSDS funding part funds projects using their own finance. For example; if a Council wants to replace end of life gas boilers with heat pumps then the Council would need to find funds equivalent to the cost of replacing the boilers on a like for like basis with new gas boilers, while PSDS funds the additional costs of heat pumps rather than gas boilers.

As you can see, the criteria for PSDS funding are changing with every phase.

Will there be a Phase Four?

There hasn’t been any confirmation about a Phase Four yet, but there is consensus that it will be released sooner rather than later in 2022.

Confirmation of the previous three phases and their subsequent timeframes to apply have been notoriously short and have come under some scrutiny from participants saying that the time given hasn’t always been long enough to work up project costs and submit accurate bids.

It is hoped that the Government will take this feedback on board and give a longer warning of when Phase Four will be announced and give a long enough window for applicants to submit their projects, but it makes sense to prepare early and have your projects fully planned ready for the next PSDS round.

Is there anything LASER could do to help you with applying for funding?

Yes, there is.

Our team know the bidding process well, and can guide you through all the important parts of the process.

We’ll be delving in to how to best plan for any upcoming PSDS phases in our next blog, so be sure to check that out when it lands.

Would you like to find out more about PSDS funding?

If you would like to find out more about PSDS funding or our Zero Carbon services, you can view our services here or alternatively contact our LASER team using the button below.

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