Salix grants help schools, hospitals and other public sector organisations replace old gas boilers with low-carbon alternatives. Following publication of grant receipts under phase 4, it’s a good time to reflect on the lessons learned so far, says Chris Rogers at Ridge

The UK has a legally binding target to reach Net Zero emissions by 2050 – and part of that will involve decarbonising public sector buildings. This means upgrading building fabric thermal performance, and switching from fossil fuels to low-carbon alternative heat sources, among other decarbonisation methods. For public sector organisations, particularly schools, which are already struggling with funding constraints and a maintenance backlog, it’s not clear where the additional investment will come from.  

One source of funding has been the Public Sector Decarbonisation Scheme (PSDS) administered by Salix, a non-departmental government body, on behalf of the Department for Energy Security and Net Zero. It awards grants to help with the cost of replacing gas boilers with a low-carbon heat source such as an air source heat pump, ground source heat pump or district heating network and associated energy efficiency measures. 

There have been four phases since 2020, and the way they are submitted and assessed has evolved as Salix seeks to distribute the funding as effectively and fairly as possible in the face of overwhelming demand. Our multidisciplinary teams have helped a number of organisations prepare their applications, and we’ve seen close-up how well-intentioned policies can have unintended impacts on the ground. Following publication of the grant receipts under phase 4, it seems like a good moment to reflect on what we’ve learned – and what the future may hold for public sector organisations that still require funding. 

1. Ranking applications on “competitiveness” risks leaving the most needy behind 

As a national, public-sector-wide decarbonisation scheme, Salix is in incredibly heavy demand. Earlier phases of funding were awarded on a first-come, first-served basis, with the application window announced several weeks in advance. When phase 3a opened for submissions in October 2023, the platform crashed under the weight. There were 443 submissions worth a total of £1.3 billion, compared to initial available funding of just £230 million (although this is understood to have been extended to £530m).  

In response, Salix introduced a different process for phase 4, which took place in autumn 2024. Applications were assessed on the carbon cost-effectiveness of the scheme – essentially, the direct carbon emissions saved divided by the cost over the lifetime of the measures. The maximum allowed cost was £510/tonne of CO2 over the lifetime of the plant, but the lower that could be made, by the organisation contributing more of the funding themselves, the more “competitive” the application would be. If the total project cost exceeded the £510/tonne threshold, they couldn’t even apply.  

On the one hand, it makes sense to target funding to achieve the highest carbon savings for the lowest amount of money. In practice, however, this potentially ruled out organisations whose buildings are much harder (and more costly) to decarbonise, and which have fewer resources to contribute in the first place. What will happen to those buildings? We need to find an answer, or risk leaving them even further behind.  

2. High application costs make decarbonisation even harder

The Salix application process requires extensive information about the building’s current performance, as well as feasibility studies, options appraisals, designs and specifications, cost estimates, a risk register and programme details. All of these services and reports may require expenditure on professional fees. This can be a heavy burden to place on organisations already struggling for funding, especially if their project turns out to be ineligible.   

These exercises do have some value outside of the Salix process, for helping schools identify their path to Net Zero. But there is also a danger that they could backfire if the application is unsuccessful and the client has incurred fees for a project they are unable to proceed with. Ultimately, this can also make decarbonisation appear too difficult or financially unviable.  

In the past, the Public Sector Low Carbon Skills Fund, has supported clients with the associated costs. This is also administered by Salix, although it has confirmed that the fund will not be running this year.  

Additionally, because only gas boilers at the end of their useful or design life are eligible for Salix funding, unsuccessful applicants will still be faced with replacing them in the near future. If a low-carbon replacement is found to be too expensive and they cannot obtain funding support, they face a difficult choice: wait for a future round of funding and apply again, or buy a new boiler now and commit to another 10 years of gas heating. Future iterations of the PSDS are still uncertain.  

This not only locks in higher carbon emissions, but potentially higher costs. Today, it is cheaper to buy and to run a gas boiler, but there may be a significant rebalancing of electricity and gas prices, to remove the current incentive for gas. Organisations buying new gas boilers today may be unwittingly committing to pay much more for heating over the longer term, and could even have to scrap them before the end of their lives. 

3. Early, multidisciplinary collaboration is essential for a compliant, value-driven design

Participating in the Salix process has been instructive in showing the importance of understanding the costs of different options as part of the design process. Because our designers work as part of multidisciplinary teams, which include cost consultants, we have been able to identify limitations and potential problems early on and work to resolve them. Without this joined-up approach, there is a risk of finalising the design only to find that it is ineligible on cost grounds, or not financially viable overall. Designing with cost and value in mind, and completing these exercises well in advance, leaves ample time for adjustments to be made to accommodate the application process or client budget. Being well prepared can only be beneficial.   

This emphasis on a joined-up approach is a key lesson not only for any future Salix funding windows, but for any Net Zero project. Decarbonisation is complex, and it’s just one of a number of competing pressures on public sector organisations and their buildings, so value for money will always be important. There will never be a blank check, no matter how globally significant the end goal.  

The key question now is how public sector organisations that were not awarded funding will decarbonise. Will there be further phases of the PSDS, and if so, will allocations be made on the same basis, or will the approach be adapted again? It’s important to recognise the constraints that such a low cost-carbon threshold places on smaller organisations. Without this, there’s a risk that the most challenging buildings to decarbonise will be left behind, with no route to improvement. 

Net Zero is a learning process for all of us, and it’s rarely possible to design a perfect funding scheme. So it’s even more important that we take stock of the lessons, both for organisations applying for grants, and for helping to target future decarbonisation funding where it will be most effective and is most needed. Salix has been doing a great job so far, and our hope is that providing feedback can help improve the scheme further.  

Chris Rogers is a Senior Associate in the Cost Management team who specialises in supporting public sector clients through Salix funding bids. You can contact him on chrisrogers@ridge.co.uk.