Phase 3 Public Sector Decarbonisation Scheme

On 8th September 2021, Salix Finance announced that Phase 3 of the Public Sector Decarbonisation Scheme (Phase 3 PSDS) will be open for applications at 2 pm on Wednesday 6th October 2021.

For Phase 3, the focus remains on the decarbonisation of heat, aiming to help the UK meet its carbon budgets and net-zero commitments by implementing energy efficiency and decarbonisation measures in buildings across the public sector.

The total amount of funding available for Phase 3 PSDS will not be confirmed until after this year's Spending Review. Therefore, there is no guarantee of any funding until the outcome of the Spending Review is confirmed, and applications are submitted at the risk of the Applicant.

The application deadline is 2 pm on Wednesday 3rd November 2021. Applications should be for projects incurring costs no earlier than Friday 1st April 2022, and no later than:

  • Friday 31st March 2023 for single year projects
  • Sunday 31st March 2024 for two year projects
  • Monday 31st March 2025 for three year projects

The solution for you

Heat decarbonisation in the built environment

At Mitsubishi Electric we have been working on and championing innovative solutions that help to reduce carbon emissions from the built environment for decades.

 Our expertise and pivotal technology has enabled us to develop renewable heating solutions that can address decarbonisation head-on, such as our range of commercial Ecodan air source heat pumps that can lower running costs and reduce carbon footprints.


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A focus on low carbon and renewable heating

Phase 3 PSDS is aimed at taking a ‘whole building’ approach to heat decarbonisation, combining heat decarbonisation with energy efficiency measures.

Most of the buildings in the public sector still rely on fossil fuel-based heating and, as these heating systems approach the end of their working lives, it is an ideal opportunity to transition those systems to low carbon heating.

The Public Sector Decarbonisation Scheme puts the public sector at the forefront of decarbonising buildings in the UK and in a leadership role to create exemplar projects in our communities that pave the way to help the UK meet its Carbon Budgets and Net Zero commitments.

The total amount of funding available for Phase 3 PSDS will not be confirmed until after this year's Spending Review. Grant offers will only be made after the total funding for the Phase 3 PSDS is confirmed. Salix Finance does not expect to be able to inform applicants if they have been successful until 2022.


Find out more about the scheme here
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Who can apply?

The organisations eligible to apply are the same as for Phase 2 PSDS. These include:

●        Central government departments and their arm’s length bodies (set out in the list of departments, agencies and public bodies as published on .GOV.UK). For central government departments where their roles are reserved (i.e., not devolved to Scottish or Welsh Governments or the Northern Ireland Executive), funding may be used for estates located anywhere within the UK

●        Emergency services

●        Institutions of further and higher education

●        Local authorities

●        Maintained schools within the state education system, including academies, Multi-Academy Trusts, and free schools

●        Nursery schools maintained by a local authority

●        NHS Trusts and Foundation Trusts

Private sector organisations are not eligible to apply for funding through the scheme. This means that schools funded by charities, private schools, private colleges, and private universities are not eligible to apply. Social housing is also excluded.

Can I apply if I was funded in Phase 1 or 2?

According to Salix Finance, there is no restriction in applying to Phase 3 PSDS if you were successfully funded in Phase 1 and 2. However, all previously funded projects must continue to meet their deadlines. Any slippage in those projects should act as an indicator that additional projects may not deliver to the required timescale of Phase 3 PSDS.

You will be asked in the application to outline any previous funding through PSDS.

What are the Phase 3 PSDS main eligible measures?

As Phase 3 is focused on heat decarbonisation, the installation of fossil fuel measures through this scheme is not available. Funding is provided for costs over and above the like for replacement costs of a fossil fuel heating system.

Eligible Projects

Eligible projects are those undertaken in England, by the Applicant, involving the installation of heat decarbonisation and energy efficiency measures. There are a number of requirements and please see our Guidance Notes here for full information.

Applicants must also demonstrate how they are obtaining value for money, as part of the application process. The carbon cost threshold provides good guidance on costs.

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Mitsubishi Electric is a world-leading supplier of energy efficient equipment that will cool, heat, ventilate and control buildings.

We supply not only the equipment but continued support throughout the lifecycle of all products whether that is in commercial and industrial properties or homes.


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Mitsubishi Electric has a vast product range that includes VRF air conditioning and chillers. Our Product Catalogue has our complete range of current products, including technical specification, so for more information please download this.

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Or if you would like a simple overview of our product range and suitable applications, please download our Product Application infographic.

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Mitsubishi Electric offers solutions that deliver the quality and excellence you would expect from a world-leading supplier. We can support you every step of the way whether pre-sales design and specification, installation and commissioning, or service and maintenance, right through to recycling.

For domestic heating service and maintenance, download our brochure below.

For commercial service and maintenance support download our brochure below, use the enquiry form on the right, or contact: 

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Email: melsmartservicelondon@meuk.mee.com

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