What is new with Phase 3 PSDS Funding?


Last November we talked about the newly launched Public Sector Decarbonisation Scheme (PSDS). With the Phase 3 PSDS application period opening up in just a couple of weeks, we thought it would be a good time to revisit and take a look at what the focus is for this phase.


What is PSDS?

Just in case you are not yet familiar with the scheme, PSDS is a part of the government initiative to achieve net zero greenhouse gas emissions across the UK by 2050. Specifically for PSDS, the focus is on funding projects that reduce carbon emissions from buildings’ energy usage. 30% of emissions in the UK come from powering our 30 million buildings.


What is Phase 3 PSDS for?

Phase 3 has a much stronger focus on reducing carbon emissions from heating buildings. This is because about 75% of buildings’ emissions come from heating, which is around 22% of the UK’s total emissions. Tackling our reliance on fossil fuels for heating buildings will drastically reduce our national output to get us on track for achieving our 2050 goal.

This focus on transitioning to low-carbon heating covers several areas. This may be replacing end-of-life fossil fuel systems, like gas boilers, with a low carbon heat source. Funding is available for those who bundle this with other energy reducing measures across the building to facilitate a ‘whole building’ approach to decarbonisation.

Other than the main focus, there have also been a couple of other changes in Phase 3 PSDS:

  • There are no longer any funding caps for applications (nor a minimum threshold). Saying this, applicants will have to demonstrate that they have the resources and supply chains available to deliver projects by an agreed date. They will also have to cover contingencies that have been considered for different parts of the project lifecycle.
  • Some of the funding is now available for more complex projects in which boilers are due to be hitting their end of life within the next three years and work would commence in the 2022/23 financial year. For example, a building may need significant work done to other parts of the building, such as the electrical infrastructure before the low carbon heating can replace the current heat source. Applications that request funding for multiple years must state how much of the fund will be used in each year. Once amounts are agreed, these cannot be transferred to different years.
  • If you are familiar with the previous phases, you may remember that carbon emissions from burning fossil fuels directly on-site or via a district heating plantroom were previously referred to as “non-traded” carbon emissions. These are now referred to as direct carbon emissions.
  • The application window will be open for a little longer, so we have time to put forward strong applications.
  • Who can apply for funding from PSDS?
  • Funding for Phase 3 PSDS is available for the Public Sector, who are spearheading the campaign. This includes:
  • Central government departments and public bodies (ALB’s)
  • Emergency services
  • Further education and higher education institutions
  • Local authorities
  • Schools within the state education system, including academies, free schools and Multi-Academy Trusts (MATs)
  • Nursery schools
  • NHS Trusts and Foundation Trusts

Not included in PSDS funding is anything in the private sector. This includes private schools, private colleges, private universities and those funded by charities. Social housing is also not included. One of the first parts of the application is to state which public organisation they are a part of.

If you have previously received funding from PSDS in Phase 1 or 2, you can still apply for Phase 3. Any applicants that do apply again will have to outline what funding they received from previous allocations and provide evidence to show the work that had been carried out.


Requirements to qualify

Assuming you qualify for all of the above, there are several more things that your application will need to adhere to, in order to acquire funding. For starters, applicants must currently be using a heating system that is powered by fossil fuels and be able to prove that it is coming up to its end of life within the next 3 years.

If your application is for a single year project, which is where the majority of the funding will be allocated, the costs should be incurred between Friday 1st April 2022 and Friday 31st March 2023.

A small portion of the PSDS funding will also be available for multi-year settlements. Two-year projects and three-year projects will have the same start date, 1st April 2022, but will end Sunday 31st March 2024 and Monday 31st March 2025, respectively.

Another requirement is that applicants must contribute like-for-like costs for the project in addition to the PSDS funding. This cost is defined as any costs incurred for the current heating system to be replaced with a typical fossil fuel heating system of the same type and size.

The applicant will also need to prove that they are using the ‘whole building approach’ as detailed above. This means that funding only for improving the energy efficiency of the building will not be provided, unless it is bundled with replacing the heating system.

One more requirement is for applicants to demonstrate how the project will achieve good value for money. The best way to measure this is against the carbon cost threshold. This should not exceed £325 per tonne of carbon saved. Applications exceeding this limit can be submitted, but only if the applicant is funding the excess from another source, such as their own reserves.


How to apply

Applications open at 2pm on Wednesday 6th October and will stay open for 4 weeks until 2pm on Wednesday 3rd November 2021. Munday + Cramer can help with the application process, preparing everything that you need to submit, but you will have to submit your application through the Phase 3 PSDS portal.


Contact Us

Munday + Cramer have years of experience creating successful bids, securing millions of pounds in government funding. Applications can be a tough process to follow and many bids are unsuccessful.

To give yourself the best chance of attaining funding, for more information on PSDS, or to find out if you are eligible, Munday + Cramer are here to help.

For more information on how the team here at Munday + Cramer can help in this process, or if you would like to find out more about our building surveying services, operating in Essex, London, Kent, Norfolk and Suffolk, then get in touch! Contact Munday + Cramer today on 01245 326 200.