What PSDS Phase 4 actually is
The Public Sector Decarbonisation Scheme is a capital grant programme operated by Salix Finance on behalf of the Department for Energy Security and Net Zero (DESNZ). Phase 4 opened in 2024 with rolling application rounds and £530m+ committed across the public sector. Unlike the Salix Decarbonisation Loan (which is interest-free debt repaid from energy savings), PSDS is a 100% capital grant — once awarded, the corporation never pays it back.
Phase 4 funds three broad categories of public sector decarbonisation: low-carbon heat (air-source heat pumps, heat networks, biomass replacement), building fabric (insulation, glazing, draught-proofing), and renewables (solar PV, solar thermal, wind, occasionally hydro). Solar PV almost always appears as a component of a wider bundled bid rather than as a standalone application — the scoring threshold for pure-PV bids is typically beyond what unsubsidised solar can hit on a tCO2e-per-pound basis.
Why FE colleges only became eligible in 2022
Until November 2022, FE colleges sat in the not-for-profit institutions serving households (NPISH) sector under ONS national accounts classification. That put them outside the central government public sector boundary for the purposes of public sector funding eligibility, including Salix loans and PSDS grants. The ONS reclassification of November 2022 moved every FE corporation, sixth form college, specialist designated institution and land-based college into central government — applied retroactively to 1 April 1993, the date of FE incorporation.
The practical consequence: from November 2022 onwards every FE corporation in the UK could access Salix Decarbonisation Loans and PSDS grants on the same terms as schools, NHS trusts, and central government departments. The administrative complications (borrowing now counts against public sector net debt; HM Treasury consent applies to major capital lines; accounting follows Government FReM rather than Charities SORP) sit with finance directors rather than estates teams — and from a project funding perspective the unlock is straightforwardly positive.
The PSDS Phase 4 scoring methodology
Bids are scored on a combined metric: estimated lifetime tonnes of CO2 equivalent saved divided by the grant value requested. Higher is better. Typical scoring threshold for a successful bid in the most recent rounds: 0.6–0.8 tCO2e per £100 of grant.
To put that in context:
- Pure-PV bid: Typical score 0.3–0.5 tCO2e per £100 — usually below threshold
- PV + battery bid: Typical score 0.4–0.6 — marginal
- Heat pump only bid: Typical score 0.7–0.9 — often above threshold
- Bundled PV + heat pump bid: Typical score 0.9–1.3 — comfortably above threshold
- Bundled heat pump + building fabric + PV bid: Typical score 1.1–1.6 — top quartile
The lesson: bundle the bid. A FE college that wants £200,000 of PV alone will struggle to compete; the same college bundling £200,000 of PV with £400,000 of heat decarbonisation will frequently win £600,000 of capital grant.
What a strong FE PSDS Phase 4 bid looks like
Eight elements appear in every winning FE PSDS Phase 4 bid we've worked on:
- Integrated design. PV and heat pump engineered as one solution — not two separate projects bolted together. Shared electrical infrastructure, shared monitoring, shared commissioning programme.
- Auditable baseline. 12+ months of half-hourly electricity meter data per site. Quarterly gas data. Documented baseline carbon footprint, not estimates.
- Realistic operational projections. Modelled CoP for heat pumps over a 25-year horizon including degradation. PV degradation curves. Electricity price inflation forecasts. Not best-case scenarios.
- Skills England linkage. Project rationale ties to T-Level Building Services Engineering, Construction, or Engineering routes; apprenticeship green-skills outcomes; curriculum delivery.
- AoC Climate Action Plan integration. The bid evidences how the project sits inside the corporation's published Climate Action Plan and accounts for a specific share of the 2030 scope-2 target.
- Corporation board approval. Formal board minute approving the bid and committing to long-term operational responsibility for the assets.
- Procurement plan. How the corporation will procure the build — direct contract, framework agreement, or competitive tender with the bid covering the full procurement cost.
- Risk register. Identified risks (DNO delay, structural surprises, weather, scope creep) with mitigation plans for each.
How we support PSDS Phase 4 bids for FE colleges
We've supported FE corporations and land-based colleges through PSDS bidding since Phase 2. We write the energy savings calculation, design the integrated bundle (PV + heat pump + optional battery and EV), produce the structural and electrical design package, manage the DNO G99 application, and draft the bid narrative for the corporation Sustainability Lead and Director of Finance to review and submit.
Our role doesn't replace the corporation's Sustainability Lead — it makes the Sustainability Lead's job tractable on top of an existing teaching or estates role. We produce the technical content; the corporation signs and submits.
PSDS Phase 4 FAQs
Are all FE colleges eligible for PSDS Phase 4?
Yes — every FE corporation, sixth form college, specialist designated institution and land-based college in the UK has been eligible for the Public Sector Decarbonisation Scheme since the November 2022 ONS sector reclassification. The reclassification was applied retroactively to 1 April 1993, putting the entire FE estate inside the central government public sector for funding purposes.
What is the typical grant value for FE college PSDS Phase 4 projects?
Single-site projects typically £100,000–£800,000. Multi-site portfolio bids from group corps can reach £1m–£5m. The single largest FE PSDS Phase 4 award to date is over £8m for an integrated heat-and-PV programme across a group corp.
How competitive is PSDS Phase 4?
Highly competitive. PSDS is scored on tCO2e saved per pound of grant. Pure-PV bids typically score below the funding threshold; bids that bundle PV with air-source heat pumps, building fabric, or low-temperature heating systems consistently score in the top 10–20% and win funding.
What is the typical application-to-award timeline?
15–22 weeks. Bids open in rolling rounds; preparation typically 4–6 weeks; statutory scoring period 8–12 weeks; award notification 2–4 weeks after scoring closes.
Can we combine PSDS Phase 4 with Salix Decarbonisation Loan?
Yes — many colleges do exactly this. PSDS funds the higher-carbon-saving elements (typically the heat pump and the larger PV array); Salix funds incremental measures (battery storage, EV charging, smaller PV extensions). The combined approach maximises capital recovery.
Does the bid need to include energy data?
Yes — auditable energy data is non-negotiable. Minimum 12 months of half-hourly electricity meter data per site, plus quarterly gas consumption data where heat decarbonisation is included. Bids without proper baseline data are filtered out at first scoring pass.