Should an FE college use Salix Decarbonisation Loan or PSDS Phase 4 for solar?
For standalone solar under £600,000, Salix Decarbonisation Loan is almost always the right route — interest-free, easy to access, cash-flow positive year one. For bundled bids pairing solar with heat decarbonisation above £100,000, PSDS Phase 4 typically wins more capital and improves the overall project NPV. Many FE corporations use both — Salix for the foundational project, PSDS Phase 4 for the larger bundled programme.
- Salix
- Interest-free loan, ≤£600k
- PSDS Phase 4
- 100% grant, £100k+
- Both eligible
- Since Nov 2022 ONS reclass
- Combine?
- Yes, common pattern
Side-by-side comparison
| Dimension | Salix Decarbonisation Loan | PSDS Phase 4 |
|---|---|---|
| Type | Interest-free loan | 100% capital grant |
| Repayment | Yes — 8 years from energy savings | No |
| Typical scale | £30k - £600k per project | £100k - £5m+ per project |
| Application timeline | 8-14 weeks | 15-22 weeks (rolling rounds) |
| Scoring threshold | None (energy savings must be auditable) | ~0.6-0.8 tCO2e per £100 of grant |
| Pure-PV scoring | Approved if savings are auditable | Usually below threshold — bundle required |
| Bundle requirements | None — can be PV only | Bundle with heat pump / fabric scores highest |
| Corporation board approval | Required | Required |
| FE eligibility | Yes (since Nov 2022 ONS reclass) | Yes (since Nov 2022 ONS reclass) |
| Multi-site portfolio | Yes — single bid supported | Yes — bundled bids supported |
| Year-1 net position | Cash-flow positive (savings > repayment) | Cash-flow positive (no repayment) |
| 25-year NPV | Strong (corp owns full benefit post-repayment) | Stronger (no repayment at all) |
| Application difficulty | Low-medium | High (competitive scoring) |
| Success rate | ~85% of well-prepared FE applications | ~25% of all bids; ~50% of bundled bids |
When to choose Salix
- Standalone solar project under £600,000
- Single-site or portfolio across same corp
- PV + battery combination
- Year 1 of Climate Action Plan delivery — fastest path to first install
- Corporation board prefers minimum capital exposure with clear repayment model
- Sustainability Lead has limited capacity for complex grant bid writing
When to choose PSDS Phase 4
- Solar bundled with heat decarbonisation (air-source heat pump replacing end-of-life gas boilers)
- Solar bundled with significant building fabric improvements
- Project capital cost above £400,000 — Salix cap getting tight
- Multi-campus group corp programme above £600,000 total
- Year 2+ of Climate Action Plan — corporation has Year-1 data baseline supporting strong bid
- Corporation has bid-writing capacity and tolerance for competitive scoring uncertainty
When to combine both (most ambitious projects)
Many of the most ambitious FE solar programmes use both Salix and PSDS Phase 4 in parallel:
- PSDS Phase 4 covers the headline heat-and-PV bundle — typically £500,000-£2m in capital grant
- Salix Decarbonisation Loan covers incremental measures — battery storage extension, additional smaller-campus PV, EV charging integration
- MCA decarbonisation grant on top where applicable — typically £50,000-£250,000 layered on relevant campuses
- Combined funding stack delivers zero net capital cost to the corporation on a multi-million programme
A worked example — combined Salix + PSDS bid
An East Midlands group corp ran a £1.31m total programme across 8 campuses:
- Salix Decarbonisation Loan: £917,000 over 10 years at £92,000/year (70% of total)
- PSDS Phase 4 capital grant: £393,000 (30% of total — paired with heat pump installs on 3 campuses)
- Annual energy savings: £305,000
- Net cash-flow positive year one: £213,000/year
- Year-11 onwards (post-Salix repayment): £305,000/year for remaining asset life