How to successfully secure PSDS funding and accelerate your decarbonisation roadmap

Dedicated to helping the UK achieve its net zero ambitions, we are supporting clients through funding applications and accelerating their journey to decarbonisation.

Ashley Malin

We’ve worked closely with our clients to navigate them through the PSDS application process and successfully secured £100m worth of PSDS phase 1 funding to deliver projects using the latest technologies to guarantee significant carbon and financial savings.

It’s highly anticipated that further rounds of PSDS funding will be available, so we’ve spoken to Ashley Malin, Vital Energi Solutions Managing Director who highlights the key factors for a successful PSDS application, how we can support organisations through the process, why time is of the essence, and about the highlights of our previous PSDS successes.

What is PSDS and who can apply?

PSDS stands for Public Sector Decarbonisation Scheme, which is a grant funding initiative from the Government to inject capital into low carbon schemes for public sector organisations, such as schools, hospitals and local councils.  PSDS provides up to 100% grant funding for any low or zero carbon initiatives that meet the eligibility requirements, so if you’re a public sector organisation who wants to implement a scheme to lower your carbon footprint and save some money through solar, heat pumps, connection to a district heating scheme, lighting, BMS upgrades or other renewable technologies, PSDS can provide all the investment required.

Why did the Government develop PSDS?

The aim they have is twofold. One aspect is the decarbonisation of public sector buildings, and the other is to help with the Covid response from the Government, to invest money and generate more jobs within the green industry.

Can PSDS be paired with other funding or private finance?

It can. PSDS can provide up to 100% grant funding for projects that meet the eligibility criteria. There may be projects that will deliver additional carbon savings that would require the support of further investment, and in these cases you can look to take a blended approach between grant funding, private investment or third party finance to deliver the right project.

For PSDS phase 1 there was no cap to the funding – the biggest single grant that Salix, who administer the scheme, awarded was £78.2m, and the smallest was £5,300. This funding is to help everyone within the public sector at any level, whether you’re a school who wants to install LED lighting or a large NHS Trust who wants to completely de-steam their site.

What are the key factors to successfully gaining PSDS funding?

The Government are looking for a balance between carbon reduction and the amount of grant funding required. So, if you’ve got a scheme which will save you a few tonnes of carbon but it costs £50m, then the tonnes of carbon saved per pound invested won’t be substantial and that particular project won’t be as desirable to fund.

The timescales for submission are very short, and the level of interest leads to a large number of applications and an oversubscription for the funding available. Our advice would be to develop your project and complete as much detailed work as you can in advance of making an application. This is an opportunity to make a significant investment into the energy infrastructure on your site, putting you well on the path to net zero carbon.

How can Vital help with the funding application?

We have successfully gained funding for six clients in Phase 1 which delivered over £100m of investment into the public sector. Applications are required to be submitted by the organisation that’s eligible to receive PSDS funding. We can complete all the documentation on your behalf, including the application form and the supplementary details, such as programmes, risk registers, drawings, and you simply approve and submit the application online.

How can I benefit from Vital’s support with my PSDS application?

We have a proven track record of helping new and existing clients gain PSDS funding. Of the £1bn fund, we helped secure £100m for public sector organisations. We have the in-house capability to complete feasibility studies, surveys and data analysis required to develop a qualifying scheme. We have the expertise to optimise the solution to ensure the project has the best possible chance of securing grant funding, and self-deliver the construction, operation, and performance guarantee over the lifetime of the asset.

Tell us about some of the PSDS successes Vital has supported.

Nottingham University Hospital’s NHS Trust is currently the largest single project that we have supported through the PSDS process, with the Trust successfully receiving £25m of funding from PSDS phase 1. The project involves completely removing the existing coal-fired boiler house and replacing it with a higher efficiency, lower carbon system. In addition, we are installing over 300KW of solar across the hospital estate to generate zero carbon electricity, along with heat pumps to generate low carbon heat. The savings to the Trust are in excess of £2.5m a year and will reduce the hospital’s carbon footprint by an impressive 14,000 tonnes a year.

Alberto Jaume, Environmental and Sustainability Manager at Nottingham University Hospitals NHS Trust, said:

“Vital guided us through the whole application process, from completing feasibility works on site and developing a successful scheme, to compiling the required documentation, and project management. The team at Vital is extremely knowledgeable and made the process simple for us, and they turned the complex application round within a really challenging timescale.”

We’re also in the process of installing battery storage across four other sites where we have secured PSDS funding. These battery storage units can provide a hospital estate with a range of options to lower carbon and reduce energy costs. Effectively, these battery storage units help turn the existing infrastructure into a “smart grid”. It will allow for the optimisation of a combination of energy systems that include solar and heat pumps, to lower energy costs, further reduce the site’s carbon footprint and enable the integration of additional zero carbon generation technology in the future.

Any words of advice for organisations considering applying for PSDS?

Time is key. Early engagement from an energy services specialist like Vital Energi to develop a range of projects suitable for funding under this kind of initiative, and being in a position to make a successful application at the earliest opportunity, is very important. Having a delivery partner is an essential factor in the evaluation carried out by Salix. From the projects we’ve been involved in, public bodies who can demonstrate that their projects are well developed and they have a partner in place to deliver the project on time and within budget, with a recognised route through procurement, are more likely to be successful in securing PSDS funding.

I’m interested in learning more; what’s the next step?

Salix has provided a lot of guidance but there is no substitute to getting in touch and talking through the process with someone with experience and a passion for decarbonisation.

Please contact Vital Energi for further information or to discuss a PSDS project you have in mind.