Government ends college decarbonisation grants scheme

Programme to lower college energy bills will not be awarding any more grants, it has been confirmed

Programme to lower college energy bills will not be awarding any more grants, it has been confirmed

16 Jun 2025, 15:57

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A government fund that has seen more than £120 million allocated to colleges to replace inefficient heating systems and reduce energy bills is being axed.

The Public Sector Decarbonisation Scheme (PSDS), launched in 2020, has been quietly scrapped after five years and more than £3.8 billion awarded to colleges, schools, local authorities and other public sector organisations.

Colleges have used the fund to upgrade their estates by fitting air-source heat pumps, installing solar panels and improving insulation.

Salix, which administers the scheme for the Department for Energy Security and Net Zero (DESNZ), confirmed that “government has taken the difficult decision to commit no further investment beyond currently awarded projects” following last week’s spending review.

The fourth and final phase of the PSDS was awarded last month, allocating £940 million across the public sector, including £23 million to 13 colleges. Those projects are expected to run until the end of the 2027-28 financial year.

The PSDS aimed to cut emissions from public sector buildings by 75 per cent by 2037, using 2017 levels as the baseline.

A parallel initiative, the Public Sector Low Carbon Skills Fund (LCSF), which supported organisations to prepare bids and heat decarbonisation plans, was scrapped in May.

DESNZ told FE Week it would announce any plans for future years “in due course” but confirmed there would be no further rounds of the PSDS.

A department spokesperson said:

“We will deliver £1 billion in current allocations of the Public Sector Decarbonisation Scheme until 2028 and, through Great British Energy, have invested in new rooftop solar power and renewable schemes to lower energy bills for schools and hospitals across the UK.

We want to build on this progress by incentivising the public sector to decarbonise, so they can reap the benefits in lower bills and emissions, sharing best practice across government and exploring the use of repayable finance, where appropriate.”

Grants of up to £5 million have been awarded to further education and sixth form colleges, with some receiving multiple allocations.

Middlesbrough College secured £4.9 million in the latest round to decarbonise its estate by installing air-source heat pumps and solar panels. Farnborough College of Technology was awarded £4.7 million to replace gas boilers with ground-source heat pumps, install solar panels and upgrade its energy management system.

Across the four PSDS funding rounds since 2020, 52 colleges have received grants. Bedford College Group has won the most – a total of £8.2 million – followed by Cheshire College South and West and MidKent College, each receiving around £5 million.

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