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Following the recent government publication we wanted to provide you with some information based on our understanding of the forthcoming scheme. We have sought official clarification on a number of items and we should be mindful that these things are kept under constant review, so we will endeavour to keep you as up to date as possible as the government’s support for the low carbon economy continues to develop.

A second tranche of funding is being made available under the Public Sector Decarbonisation Scheme. The scheme, designed to reduce carbon emissions related to heating within buildings through replacement of fossil-fuel boilers, building fabric improvements and related energy efficiency measures, was launched in October 2020.

So far, the scheme has awarded funding to 317 public sector organisations for 429 energy efficiency and heat decarbonisation projects, valued at £932 million. An additional £75 million of funding is now being made available when applications open on 7 April.

What’s new?
The eligibility for the latest funding is a little different to that of the first round. To qualify for the scheme, buildings must have a fossil-fuelled heating plant that has reached the end of its life. This would typically apply to boilers that are a minimum of 15-20 years old that could be updated to a low carbon replacement, generally either an air-to-water source heat pump; ground source heat pump; water source heat pump; electrical heating; or connection to an existing district heating network. Biomass boilers can now be funded, although potential issues with air quality in built-up areas may exclude these, depending on an organisation’s location.

Importantly, the new funding requires applicants to take a ‘whole building’ approach to projects. What this means in practice is that applications will need to identify measures that improve the building’s thermal envelope to reduce heat losses, such as replacing windows; adding insulation; and improving air tightness. Identifying measures to reduce energy use can be included, however, some measures that save traded carbon (generally this means grid electricity) won’t go towards the savings for assessing the grant value. The cost of other enabling works can be included, even if there are no carbon savings. This can include electrical system upgrades; site establishment; and creating temporary access routes for construction etc. However, since a ‘whole building’ approach now applies it will not be possible to fund measures on other buildings where the heating plant is not being replaced.

The assessment for determining the grant value has also changed significantly. The new maximum funding rate is based on £325 per tCO2e LT, compared to £500 per tCO2e LT in Phase 1. Only non-tradable carbon emissions go towards this target. This means emissions related to combustion of fossil-fuels, not grid electricity. The total project value used for assessment is also reduced by the marginal cost of upgrading the existing end-of-life boiler plant with a like-for-like replacement.

Another difference is that individual grant applications are limited to £5 million, although applicants can submit more than one application if required which will be particularly relevant for multi-site organisations. The changes in assessing grant values means it will be challenging for projects to be fully funded under the scheme, and applicants will need to satisfy Salix that funds are available bridge the gap between the grant and the full project value.

The application window opens on 7 April, and all projects successful in gaining funding will need to be completed by March 2022.

How can Zenergi help?
Our technical team supported applications for circa £55 million of grant funding in the first round. Although the scheme was highly oversubscribed, we successfully secured circa £15.6 million for projects for both Local Authority and educational clients. We are reviewing the applications we supported that were unsuccessful to assess their qualification status for the new funding. We will be in contact with those customers once we have evaluated them to advise on next steps.

The limitations of the eligibility criteria mean that many organisations will not be able to take advantage of the funding. Remember that the path to net zero is a journey, not a race, and we are on hand to provide support in building your Carbon Management Plan; to support you with energy saving tips; and to deliver audits and surveys to help identify energy saving measures. Consider what low cost and no cost measures can be taken to reduce the organisation’s carbon footprint – often simple behavioural changes can provide energy savings of as much as 20% when they are consistently applied organisation-wide.

Email: bepositive@zenergi.co.uk

Phone: 023 8028 6300

24 Mar 2021

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