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A Deep Dive into Public Sector Decarbonisation Scheme: Fuelling Decarbonisation

What is PSDS?

The Public Sector Decarbonisation Scheme, ‘PSDS’, is a grant initiative by the government. It offers funding to a wide range of organisations for decarbonisation and energy reduction efforts across estates.

The government’s aim remains to achieve ‘net zero’ greenhouse gas emissions across the UK by 2050. A total of £230 million funding is available in 2024/25, although phase 3c allows expenditure to be spread across financial years, to allow for enabling works, scheme development and implementation.

The scheme encourages participation from government-owned or controlled organisations, businesses, and industries across three sectors: ‘Education’ (schools, universities), ‘Healthcare’ (hospitals, health centres), and ‘Other’ (emergency services, local authorities, clubs, leisure and community centres, law courts, prisons, MOD buildings, museums, and theatres). It is an opportunity for eligible bodies to be assisted in their contribution to sustainability.

What is heat decarbonisation?

Heat decarbonisation refers to a strategic shift away from the burning of fossil fuels for heating, hot water, and catering purposes. It involves adapting alternative and sustainable energy sources to minimise greenhouse gas emissions and promote a cleaner approach to heating.

What’s the best approach?

The guidance clearly suggests that to make this achievable and most effective, it is crucial to adopt a “whole building approach”. In other words, upgrading heating systems to non-fossil fuel alternatives should be prioritised only after addressing existing thermal inefficiencies, including things like roof insulation, cladding, and fenestration. This criterion ensures that submissions are evaluated based on the critical need for improvement rather than just the promotion of new technologies.

The existing fossil fuel installation must be identified (by appropriately qualified personnel) to be at the end of its economic life.

The Detail

PSDS grants have specific funding guidelines. They do not cover the entire cost of heating replacement projects. Applicants are required to contribute a minimum of 12% of the total project value for a ‘like for like’ replacement with a fossil fuel heating plant. The purpose of PSDS grants are to, therefore, provide additional funding on top of traditional heating replacement costs, allowing for the implementation of new technologies without adding financial burden to the public sector body.

It is worth noting that other funding sources such as Condition Improvement Funding (CIF) for education, can be secured independently for the ‘like for like’ fossil fuel replacement heating system cost, separate from a PSDS application.

Case Studies

KK secured Condition Improvement Funding for a heating replacement project at a large academy. The feasibility report revealed that one building (which required a replacement heating plant) had undergone significant external fabric improvements. Initially, a new gas condensing boiler was specified for the replacement of the existing combustion plant, based on cost effectiveness. However, a subsequent PSDS application for a heat pump and photo-voltaic array was approved, providing additional funding needed to implement new, non-fossil fuel technology.

We’re also set up to help with projects after funding has been received. At the University of Winchester, we were brought on board post funding to provide technical, contractual, financial, and logistical support to deliver £3.1m in decarbonisation measures. The project has been significant in the University's decarbonisation journey; carbon savings are immense at over 500 tonnes, with an annual six-figure financial benefit.

Learn more about the University of Winchester case study.


Phase 3c of the scheme will start accepting applications on Tuesday, October 10, 2023, at 2pm. Qualifying applications will be awarded in the order they are submitted, so it’s crucial to be prepared and ready to submit as soon as the portal opens.

KK would be pleased to assist further with enquiries into the process or assistance post funding.

Nathan Willmott – Principal Chartered Building Surveyor.

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