Salix PSDS solar funding for the public sector in 2026
The Public Sector Decarbonisation Scheme (PSDS), administered by Salix Finance on behalf of the Department for Energy Security and Net Zero, remains the single largest pot of grant money available to public sector estates wanting to install solar. If you run an office estate inside central government, the NHS, a local authority, a school or college, or an emergency service, Salix PSDS can fund up to 100% of an eligible solar and energy-efficiency project. This guide explains how the scheme actually works in 2026, what it will and will not pay for, and how to put together an application that survives the carbon-cost test.
Unlike the private-sector commercial market — where projects are funded from cash, asset finance, an operating lease or a power purchase agreement — public bodies have a genuine grant route. That changes the entire economics of a project, and it changes how you should plan one.
Who can apply
PSDS is open to the public sector only. In practice the eligible body types include:
- Central government departments and their arm’s-length bodies
- NHS trusts, foundation trusts and integrated care boards
- Local authorities (county, district, borough, unitary and combined)
- Maintained schools, academies, sixth-form colleges and FE colleges
- Emergency services — fire, police and ambulance
- Universities (with some scheme-phase restrictions)
Private companies, even those delivering public contracts, cannot apply directly. If you provide public sector solar services or occupy a leased public building, the grant has to be held by the public body that owns or controls the asset.
What PSDS will fund
PSDS is a decarbonisation scheme, not a renewables subsidy. The grant is built around removing fossil-fuel heating and cutting carbon, so solar PV is usually funded as part of a wider package rather than on its own. A typical funded office project bundles:
- Rooftop or canopy solar PV
- Heat pump replacement of gas or oil boilers
- LED relighting and lighting controls
- Building management system upgrades
- Insulation and fabric measures where cost-effective
Solar on its own — with no heat decarbonisation — is harder to get through, because the scheme’s core metric is the cost per tonne of carbon saved. Pairing PV with a heat pump retrofit nearly always strengthens the bid, because the new electric heating load makes on-site generation more valuable.
The carbon-cost test — the number that decides everything
Every PSDS phase sets a maximum grant value per tonne of lifetime CO2 saved. Your project has to come in under that threshold to be eligible, and lower-cost-per-tonne projects are prioritised when the fund is oversubscribed — which it always is.
This is why the design of the system matters as much as the grant application itself. A solar array sized correctly against the building’s actual half-hourly demand will self-consume more generation, displace more grid carbon and score better than an oversized export-heavy system. We size every public sector array from real metered data, not roof area, for exactly this reason.
Indicative carbon-cost banding
| Project type | Typical grant cost per tonne CO2 | Likelihood of approval |
|---|---|---|
| Heat pump plus solar bundle | Low to moderate | Strong |
| Solar plus LED and controls | Moderate | Good |
| Solar PV only | High | Weak on its own |
| Fabric-only with no heat measure | Very high | Poor |
The exact thresholds change phase to phase, so treat the bands above as direction of travel rather than fixed figures. We model your project’s cost per tonne before you commit, so you know where you sit.
How much funding, and how fast
PSDS can cover up to 100% of eligible capital costs. There is no requirement for the public body to find match funding, although co-funding a larger scheme can sometimes improve the carbon-cost ratio. Grant offers are time-limited: funded works typically must be delivered and spent within a defined window after the grant award, often a single financial year or close to it.
That delivery deadline is the most common reason public sector solar projects fail. A grant awarded in spring with a March completion deadline leaves very little room for G99 grid-connection approval, structural sign-off, procurement and installation. Projects that win and deliver are the ones that have the feasibility work, the structural survey and the grid application already in motion before the funding round opens.
What a winning application needs
From the projects we have supported, five things separate a funded bid from a rejected one:
- A heat decarbonisation element. Solar bundled with a heat pump almost always beats solar alone on cost per tonne.
- Metered demand data. Half-hourly consumption proves self-consumption and sharpens the carbon case.
- A real delivery plan. Named contractor, lead times, grid-connection status and a programme that fits the spend deadline.
- Robust costs. Fixed-price proposals, not budget estimates, so the cost-per-tonne figure holds up.
- Accurate carbon factors. Lifetime CO2 calculated on current grid intensity figures, not out-of-date numbers that overstate savings.
Where PSDS sits among the other routes
PSDS is not the only public sector option, and it is not always the best fit — for example where the spend deadline is too tight or the carbon-cost ratio is borderline. Other commercial solar grants and allowances may apply, including the Industrial Energy Transformation Fund for energy-intensive public facilities, and standard capital allowances for any public corporation that pays tax. For most office estates, though, PSDS is the headline route precisely because it can reach 100% grant cover that no commercial scheme matches.
It is also worth running the numbers both ways. A solar project that is fundable commercially — through asset finance or a power purchase agreement — frees up grant capacity for the harder-to-fund heat decarbonisation measures. Sometimes the smartest move is to fund solar privately and point PSDS at the heat pumps.
Estimating the project before you apply
You do not need a calculator widget to scope a public sector solar project — you need accurate system sizing against real demand and an honest carbon-cost figure. Our solar cost calculator gives you an indicative system size, capital cost and payback for an office building, which is the starting point for any PSDS feasibility case. Standard installs run GBP700-1000 per kWp, with payback of 5-9 years before any grant — and far faster once grant cover is applied.
Indicative public sector office project sizing
| Office floor area | Indicative system | Indicative capex | Annual CO2 saved |
|---|---|---|---|
| 1,000 sqm | 50-80 kWp | GBP40k-70k | 12-20 tonnes |
| 2,500 sqm | 120-200 kWp | GBP100k-180k | 30-50 tonnes |
| 5,000 sqm | 300-500 kWp | GBP250k-450k | 70-120 tonnes |
Figures are indicative and depend on roof orientation, shading, demand profile and grid headroom. A proper feasibility study replaces every number above with modelled values for your specific building.
How we help public bodies through PSDS
We deliver fully accredited public sector installs — MCS, NICEIC, RECC and TrustMark — backed by a 10-year insurance-backed workmanship warranty. Every project starts with a free seven-day desk feasibility study built from your half-hourly meter data: system size, carbon-cost figure, fixed-price proposal and a Scope 2 disclosure pack on commissioning. That feasibility pack is exactly what a PSDS application needs to clear the carbon-cost test.
If your estate is weighing up a PSDS round, the time to start is before the funding window opens. Send us your building details and meter data and we will model the solar route and the carbon case for you. Request a free feasibility study.