Exploring the funding options for heat pump projects in commercial buildings

Hamworthy Heating understands the challenges businesses are facing in meeting the UK’s 2050 Net Zero target. While many public sector commercial buildings still rely on fossil fuel-based heating, transitioning to decarbonised systems, like heat pumps, can cut emissions by up to 70%. Yet, funding for low-carbon heat sources in public sector non-domestic buildings is limited, and navigating eligibility and applications can be daunting. 

Where funding is available, it is playing a crucial role in the adoption of commercial heat pumps, particularly within public sector commercial buildings. With funding and heat pump government grants, heat pump costs are becoming increasingly more manageable, aligning with new building regulations that require decarbonisation efforts. This financial support helps bridge the cost gap between traditional boilers and heat pump installations, facilitating the shift to greener energy. 

Understanding the Public Sector Decarbonisation Scheme (PSDS)

The Salix Finance funded PSDS aims to cut emissions from public sector buildings by 75% by 2037, compared to 2017 levels. This scheme is the most accessible to projects in the non-domestic public sector. The PSDS has been in operation since 2020 and has allocated a total of £2.22 billion in grants across three Phases, funding almost 1,000 projects so far. Recently, Phase 4 was announced, with a funding pot of £1.17 billion for public sector decarbonisation, including public commercial heat pump projects, with funding to be allocated between 2025-28 as follows:

  • £670 million in 2025 to 2026
  • £300 million in 2026 to 2027
  • £200 million in 2027 to 2028

While Phases 1, 2, and 3 of the scheme were granted funding on a first-come, first-served basis, Phase 4 will allocate grants to projects that offer the best value for money based on the most direct carbon emission reductions. Hamworthy can advise on the best heating product selection for your project, supporting you with all the necessary product information for your application.

Having an understanding of the PSDS application process considerations can help make sure that you are fully aware of your funding options and plan for a smooth implementation of your project. For instance, when installing heat pumps and applying for the PSDS, you must contact your distribution network operator (DNO) beforehand – so you can be sure that your local grid can handle the new heat pump's demand (particularly so for larger heat pumps). DNO costs can be included in your PSDS application, but if you fail to complete this step, you may risk losing your funding.

The timeline of your project is also a crucial consideration before making an application. Funding is not available for projects that cannot deliver to the timeframe set out by the funding body, and projects which are not completed before the deadline may be liable for any project costs incurred after this date. DNO considerations must also be completed within this timeframe and due to the volume of applications, this can take time. 

Hamworthy can support you in specifying the most appropriate Tyneham heat pump for the project so that when applying for funding, you or the local authority know that your project meets the requirements of the PSDS and necessary decarbonisation contributions.

What impact has the PSDS had so far? 

The PSDS has been a particular success for public sector heating projects and is helping to bring the UK closer to net zero. The UK public sector is expected to save an estimated £650 million per year on average to 2037 due to low carbon heating and energy efficiency measures. 

Following the success of previous funding, the UK government remains committed to maintaining momentum in decarbonisation funding schemes for public sector commercial buildings. The continued ASHP funding shows that heat pump systems, as well as other low-carbon alternatives, can be successfully used in the public sectors to help reach net zero goals. 

What are the alternatives?

It is important to note that there are other funding options available covering a variety of project types, including:

  • The Green Heat Network Fund (GHNF)
  • The Low Carbon Skills Fund (LCSF)
  • Social Housing Decarbonisation Fund (SHDF)
  • Funding provided by Department of Energy Security and Net Zero (DESNZ)

The PSDS however is the most applicable to public sector commercial buildings.  

If funding isn’t available, hybrid systems may be a lower cost consideration for your property, using both traditional and renewable technologies. Even without direct funding, exploring cost-effective hybrid options is an important consideration when decarbonising your property. If you are interested in hybrids systems, why not have a look at Hamworthy Heating’s insights on hybrid systems and their role in achieving net zero. 

Navigate the heat pump funding process with Hamworthy Heating

Hamworthy Heating assists commercial consultants and specifiers in finding energy-efficient heating products for their projects. 

Hamworthy can support you with technical information and recommend Hamworthy Heating products aligned with your project’s needs. In addition, Hamworthy can offer you a suggested engineering profile to enhance your application, all at no cost when Hamworthy products are used. This information can then be shared with your local authority who will complete your funding application. 

Even after heat pump funding has been allocated, Hamworthy will continue to provide support with product specifications to keep your project running smoothly. This specialist knowledge is built up from decades of experience in researching, designing, and building market-leading products in the UK including projects like the Tyneham commercial air source heat pump range. For more information on selecting the right low carbon product for your project  when applying for funding, get in touch with your Area Sales Manager.