Salix Finance for Solar 2026: PSDS, Recycling Fund, How to Apply

Salix Finance Ltd is the UK government's delivery vehicle for low-carbon project finance into the public sector. For commercial solar PV, Salix runs two relevant programmes: the Public Sector Decarbonisation Scheme (PSDS) — a competitive 100% grant — and the Salix Recycling Fund — a permanent interest-free loan that pays back from verified energy savings. Together they fund hundreds of solar installs every year across UK schools, NHS estates, universities, councils, and emergency services. This guide explains exactly how the schemes work in 2026, what they award, who's eligible, and how to position an application that wins.

The two Salix programmes for solar in 2026

PSDS (Public Sector Decarbonisation Scheme). Competitive 100% grant for whole-building decarbonisation. Phases run roughly annually, sized £230m-£500m per round. Awards typically £50k-£20m+ per project. Funding is paid in tranches against milestone delivery. The current scheme guidance is published at gov.uk/psds. Eligible bodies cover central government, schools and academies, further and higher education, NHS trusts, local authorities, emergency services, and arms-length government bodies.

Salix Recycling Fund. Permanent revolving interest-free loan available year-round. Public bodies borrow capex for a low-carbon project, repay out of verified energy savings over 5-10 years, no interest. Loan size typically £50k-£2m. The Recycling Fund is the better fit for smaller projects (sub-£500k) or where a body cannot wait for the next PSDS competitive round. See salixfinance.co.uk for current borrower portal and rates.

Both schemes can be combined with the Local Authority Treasury Investment Forum (LATIF), Department for Education capital allocations for academies, NHS-specific decarbonisation pots, and Welsh / Scottish equivalents. Stacking funding is fine; double-funding (claiming the same kWh saved twice across schemes) is not.

What PSDS has actually awarded for solar (real numbers)

PSDS award sizes across published phases (Phase 1, 2, 3a, 3b, 3c, 3d) for solar projects:

State school solar (rooftop, 80-250 kW): typical award £180k-£550k, including LED retrofit and BMS upgrade alongside PV.
FE college solar + heat pump combined: £900k-£2.4m typical, two-building decarbonisation scope.
NHS trust hospital site (rooftop + carpark canopy): £1.8m-£8m typical, often combined with heat-network upgrade and lighting.
Council leisure centre (pool roof solar + air-source heat pump): £450k-£1.4m typical.
University campus PV (multiple roofs, sub-1MW total): £1.2m-£4.5m typical, often combined with battery storage and EV charging.

Salix publishes per-project award data; the figures above are derived from published award notices across PSDS Phases 1 through 3d.

Eligibility — who can apply

State-funded schools and academies (England). Both Local Authority maintained and academy trusts qualify. Free schools and special schools qualify.
Further and Higher Education. Sixth-form colleges, FE colleges, universities. Independent fee-charging institutions do not qualify.
NHS bodies. Trusts, foundation trusts, integrated care boards (ICBs), Mental health trusts. Primary care GP practices typically do not directly qualify (they apply via NHS Property Services or the ICB).
Local authorities. County, district, unitary, borough councils. Combined authorities. Parish councils typically too small to qualify directly but can apply via district sponsor.
Emergency services. Police forces, fire and rescue services, ambulance trusts.
Central government and arms-length bodies. DESNZ, DEFRA, HMRC, DVLA estate, the prison and courts estate.

Application process — step by step

Confirm eligibility against the published guidance for the current phase. Each phase has slight scope variations.
Develop project brief. System size, expected CO2 savings (tCO2/yr), expected kWh savings, capex breakdown, simple payback (often required to be under 15 years), and how the project fits the body's wider net zero pathway.
Get a competitive technical proposal. MCS-certified installer, PVSyst yield model, full bill of materials, EREC G98/G99 application planning, structural survey if needed. Salix expects technical documentation that an independent reviewer can verify.
Procurement compliance plan. Most public bodies use Crown Commercial Service frameworks (RM6262 Energy Efficiency Measures, RM6258 Heat Networks, etc.) or their internal OJEU-compliant route. Salix asks how you intend to procure.
Submit via Salix portal within the published window. PSDS portal opens for 4-8 weeks per phase; first 2 weeks of submission have higher success rates than late ones (assessor capacity favours early-submitted strong bids).
Assessment. 8-16 weeks typical. Assessors check eligibility, technical feasibility, value for money (cost per tCO2 saved), readiness to deliver.
Award and contract. Award letter, grant funding agreement, milestone payment schedule.
Run procurement. Now that funding is awarded, you procure to your published plan. This typically takes 12-16 weeks for solar PV at sub-500 kW scale.
Deliver within the funding window. PSDS funding must usually be spent within 12-24 months of award. Late delivery risks recovery of the grant.
Post-completion verification. 12 months of half-hourly meter data + generation data submitted to Salix to evidence that savings match the application baseline.

What scores well in PSDS

Cost per tonne CO2 saved. The single most important scoring metric. Solar PV scores well because per-kWh carbon factor is high and capex is dropping. Combined measures (solar + heat pump + LED) typically score higher than solar alone.
Whole-building approach. Bids covering the building fabric, heating, lighting, and generation together score higher than single-measure bids.
Readiness to deliver. Bidders with completed feasibility studies, structural surveys, planning consent (where required), and DNO pre-application engagement complete score higher than bidders only at concept stage.
Co-funding. Bids that contribute some of their own capital (often 10-30%) score higher than 100% Salix-funded bids. The Salix Recycling Fund can provide the co-funding.
Equity / deprivation indicators. Projects in higher-deprivation Local Authority areas, or supporting schools in challenging contexts, score additional priority weighting.

What does NOT score well

Bids that try to fund routine maintenance dressed up as decarbonisation (replacing a 20-year-old gas boiler with a new gas boiler is not PSDS-eligible).
Bids without verified baseline meter data — assessor can't measure the savings claim.
Bids where the procurement route is unclear or non-OJEU-compliant.
Bids with a simple payback over 15 years — the cost-per-tonne maths usually fails.
Single-measure bids on buildings with no wider decarbonisation pathway — Salix wants to see the project as a step on a published net zero pathway for the body, not a standalone asset.

How we deliver PSDS-funded projects

We have completed 40+ public-sector solar projects across PSDS Phases 1-3, ranging from 80 kW academy rooftops through 2 MW NHS trust ground-mount canopies. Our delivery model on Salix-funded work:

Free desk feasibility — 5 working days from receipt of half-hourly meter data and roof drawings. Output: indicative system size, capex range, expected tCO2 saving, suggested complementary measures (LED, heat pump, BMS) where they strengthen the bid.
Fixed-price proposal — within 7 working days of site survey. Locked-in capex with no change-order risk during the funded delivery window.
Application pack support — we provide the PVSyst yield model, structural calculations, DNO pre-application correspondence, bill of materials, and procurement-compliant cost build-up that bid writers can drop into the Salix portal.
Crown Commercial Service frameworks ready — we are positioned on RM6262 (Energy Efficiency Measures Direct Award) and RM6258 (Heat Networks and Decarbonisation). Procurement post-award is fast.
Post-completion verification — quarterly performance reports against PVSyst baseline; full year-one data pack submitted to Salix on the body's behalf.

Salix Finance for solar FAQs

What is Salix Finance and how does it fund commercial solar?

Salix Finance Ltd is a non-departmental public body funded by the UK government (DESNZ) that delivers low-carbon project finance to the UK public sector. For solar PV, Salix runs two relevant programmes: the Public Sector Decarbonisation Scheme (PSDS) — interest-free 100% grant funding for low-carbon retrofits including solar, in phases of typically £230m-£500m per round — and the Salix Recycling Fund, an interest-free loan to public bodies that pays back from energy savings. The Recycling Fund is permanent and available year-round; PSDS is competitive and opens for application in defined windows.

Which public sector bodies are eligible for Salix funding?

Eligible bodies include central government departments, schools and academies (state-funded), further and higher education colleges and universities, NHS trusts and foundation trusts, local authorities, emergency services (police, fire, ambulance), and arms-length government bodies. Private sector businesses cannot apply directly — though if you own a building leased to an eligible public-sector tenant, the tenant can apply.

How much does Salix award for solar PV projects?

PSDS award sizes have ranged from approximately £50,000 to over £20 million per project across rounds. The median award for school solar projects in Phase 3a/3b was around £350,000-£650,000 (typically funding a 100-300 kW rooftop array plus complementary measures like LED, insulation, or heat pumps in the same bid). Hospital trusts have received multi-million-pound awards covering combined heat-network upgrades, solar PV, and battery storage. Salix Recycling Fund loans are typically £50,000 to £2 million per applicant body, repayable interest-free over 5-10 years from verified savings.

What is the Salix PSDS application process?

Steps: (1) Confirm eligibility against the published guidance for the current phase. (2) Develop a project brief — system size, expected savings in tCO2 and kWh, capex, payback. (3) Get a competitive technical proposal from an MCS-certified installer including PVSyst yield model and bill-of-materials. (4) Complete the Salix application portal entries — usually requires DEC/EPC ratings, half-hourly meter data evidence, and procurement compliance statement. (5) Wait for assessment (typically 8-16 weeks per round). (6) On award, run procurement (Crown Commercial Service frameworks like RM6262 are commonly used). (7) Deliver within the funding window — usually 12-24 months. We have a delivery team familiar with all current PSDS phases and Crown Commercial Service framework procurement.

Can Salix fund solar combined with battery storage and heat pumps?

Yes — and combined projects often score higher. PSDS is designed to fund whole-building decarbonisation, not single-measure installs. A typical strong PSDS bid combines solar PV (cap roughly 100-400 kW), battery storage (sized to lift self-consumption), heat pump replacement of gas boilers, LED lighting refresh, and building fabric improvements. Carbon savings calculations stack across measures, increasing the cost-per-tonne-CO2 efficiency which is a primary scoring metric.

How does Salix Finance differ from the Industrial Energy Transformation Fund (IETF)?

Salix funds the public sector. IETF funds private-sector energy-intensive industry — manufacturing, food & drink processing, chemicals, paper, ceramics. The two cannot overlap. A private factory cannot apply to Salix; a state school cannot apply to IETF. We work with both routes across the portfolio — see our /industrial-energy-transformation-fund/ guide for private-sector industrial grants.

What evidence does Salix require to release funding?

Salix requires verified energy savings post-install — typically via half-hourly metering data over the first 12 months, compared to a baseline period. Solar generation must be monitored (any modern commercial inverter monitoring satisfies this — SolarEdge, Fronius, SMA, Huawei, Sungrow). PVSyst yield modelling provided at application stage forms the savings baseline. We deliver every PSDS-funded install with monitoring active from commissioning day one and provide quarterly verification reports to the funded body.

When does the next PSDS phase open and what should we do now?

PSDS phases are announced by DESNZ typically 8-12 weeks before opening. Bodies that want to be ready should: (1) commission a feasibility study now — even outside of an active phase, Salix accepts feasibility evidence prepared up to 12 months prior; (2) gather half-hourly meter data and DEC/EPC certificates; (3) get a fixed-price installer quote on file. When PSDS opens, well-prepared bids submitted in the first 2 weeks of the window have a materially higher success rate than late submissions. We provide free desk feasibility for any UK public-sector body considering a Salix application.

Related guides

Every UK commercial solar grant and funding route for 2026 — the master guide covering Salix, AIA, SEG, IETF, regional grants, and finance routes.
IETF — private-sector industrial decarbonisation grants — for energy-intensive manufacturing that can't access Salix.
100% Annual Investment Allowance on solar — applies to limited companies, not public sector.
Power Purchase Agreements — zero-capex commercial solar where Salix isn't available.
Solar panels for UK schools — sector-specific delivery for academies and MATs.
Solar for NHS estates — NHS-specific decarbonisation guidance.

Salix Finance for Commercial Solar: PSDS, Recycling Fund, How to Apply