What the Salix Decarbonisation Loan is
The Salix Decarbonisation Loan (formerly Salix Recycling Fund) is the UK's longest-running interest-free capital loan facility for public sector energy efficiency and decarbonisation projects. Salix Finance Ltd is a not-for-profit company funded by the Department for Energy Security and Net Zero (DESNZ) with a remit to lend to public sector bodies for projects that deliver verifiable energy and carbon savings.
For FE colleges, sixth form colleges, specialist designated institutions and land-based colleges, the Salix Decarbonisation Loan is now the default capital funding route for solar PV projects. It works simply: the corporation borrows the project capital interest-free, repays from the energy savings the project delivers, and after the repayment period ends keeps 100% of ongoing savings for the remaining asset life.
The November 2022 ONS reclassification — what changed
Until November 2022, FE corporations sat in the not-for-profit institutions sector under ONS national accounts. That put them outside the eligibility boundary for Salix loans (which require central government public sector status). The November 2022 reclassification moved every FE corporation, sixth form college, specialist designated institution and land-based college into central government — applied retroactively to 1 April 1993.
From November 2022 every FE college in the UK has had the same Salix Decarbonisation Loan eligibility as a school, an NHS trust, or a Whitehall department. The administrative consequences (borrowing against public sector net debt, FReM accounting framework) sit with finance directors; from a project funding perspective the unlock is unambiguously positive.
Typical economics — single-site general FE college
Take a 280 kW PV installation on a general FE main teaching block:
- Project capital cost: £240,000 at £860/kW (typical mid-scale unit cost)
- Salix loan: £240,000 over 8 years (100% capital cover)
- Annual repayment: £30,000 (capital only — no interest)
- Modelled annual energy savings: £55,000–£65,000 (driven by year-round FE daytime baseload and 60% self-consumption rate)
- Net cash-flow positive year one: £25,000–£35,000
- Year-9 onwards (post-repayment): £55,000–£65,000/year for the remaining 17 years of PV system life
- 25-year nominal benefit: £1.1m–£1.4m
Typical economics — multi-site group corp portfolio
Group corp portfolio Salix bids deliver markedly stronger unit economics:
- Portfolio capital cost: £1,310,000 across 8 campuses at £815/kW
- Salix loan: £917,000 (70%) over 10 years — paired with £393,000 PSDS Phase 4 capital grant (30%)
- Annual Salix repayment: £92,000
- Modelled annual group-wide energy savings: £305,000
- Net cash-flow positive year one: £213,000/year
- Year-11 onwards: £305,000/year for remaining asset life
The Salix bid mechanics
A complete Salix Decarbonisation Loan application includes seven elements:
- Energy savings calculation using Salix methodology — auditable baseline, modelled generation, realistic self-consumption assumption, 25-year operational projection
- Engineering design package — MCS commercial design, structural survey, electrical design, DNO G99 application
- Procurement plan — direct contract, framework, or competitive tender
- Corporation board approval minute — formal board resolution committing to the project and the repayment obligation
- Financial model — capital cost, repayment schedule, energy saving projection, net position year-by-year
- Risk register — DNO delay, structural surprises, weather, scope creep, with mitigation plans
- Climate Action Plan tie-in — how the project sits inside the corporation's AoC Climate Action Plan
We write all seven elements as part of the project engagement. The corporation's Sustainability Lead and Director of Finance review and sign; the application goes from us into Salix via the corporation's authorised signatory.
Application timeline
Typical end-to-end Salix application timeline for FE college solar projects:
- Week 0–4: Feasibility study, structural survey, half-hourly meter data analysis
- Week 4–8: Engineering design package, DNO G99 application initiated
- Week 8–10: Salix bid drafted, corporation board paper prepared
- Week 10–12: Corporation board approval, Salix application submitted
- Week 12–18: Salix review and approval (typically 6 weeks; faster for repeat applicants)
- Week 18–22: Loan offer issued, contract executed, deposit released to contractor
- Build phase: Per the project programme
Total: typically 16-22 weeks from feasibility kickoff to Salix loan funds released. The DNO G99 application runs in parallel and is typically the longest-lead item.
Salix Decarbonisation Loan FAQs
How much can a single FE college borrow under Salix Decarbonisation Loan?
Standard project loans are up to £600,000. Larger group corporation portfolio bids can exceed this with discretionary case-by-case approval from Salix — the largest single FE Salix application we have worked on was £917,000 covering an 8-campus group programme.
What is the repayment term?
Typically 8 years for single-project Salix loans. Multi-site group corp programmes have been agreed at 10 years where the energy savings calculation supports the longer term. Repayments are made directly from the realised energy savings — never a separate budget line.
How does Salix verify the energy savings calculation?
The calculation must follow Salix's published methodology — auditable baseline (12+ months half-hourly meter data), modelled generation using accepted PV simulation tools (PVsyst, PV*Sol, or Salix-approved equivalents), realistic self-consumption assumption per use pattern, and a 25-year operational projection. Bids with hand-waved calculations are rejected at first review.
Can we apply for multiple Salix loans across our group corp campuses?
Yes. Several FE group corporations have successfully applied for separate Salix loans across multiple campuses, either as a single combined bid or as sequential annual applications. Salix has been broadly supportive of group-scale FE applications since the November 2022 ONS reclassification opened the eligibility door.
What happens after the 8-year loan repayment ends?
After repayment ends the full annual energy saving drops to the corporation's bottom line. For a typical 280 kW general FE install repaying at £33k/year against £55-65k/year of energy savings, the post-repayment net benefit is £55-65k/year for the remaining 17 years of the PV system's 25-year lifespan — typically £1m+ cumulative.
Are sixth form colleges eligible for Salix loans?
Yes — sixth form colleges sit inside the November 2022 ONS reclassification scope, whether they have converted to academy status under the Sixth Form College Academy Conversion route or remain as standalone sixth form colleges. Eligibility is identical to general FE corporations.