Salix Finance are a non-departmental public body owned by the government which provides interest-free government-backed loans to the public sector for projects which improve energy efficiency, reduce carbon emissions and lower energy bills.
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Public loans are provided by the government to fund sectors or projects identified as policy priorities. Unlike grants, the loans must be repaid, but government support can provide benefits to local authorities through lower borrowing costs, longer maturities or more favourable terms compared to commercial borrowing.
Public loans are therefore an important source of financing for a local authority given that they are usually characterised by low interest rates or, in some cases, can even be interest-free.
Salix Finance is a non-departmental public body owned by the government which provides interest-free government-backed loans to the public sector for projects that improve energy efficiency, reduce carbon emissions and lower energy bills
- Finance source: BEIS
- Funded project phase: (Design), build
- Typical project size: £500,000
- Match funding: Required
In recent years, government has provided loan support for local authority investment in energy projects through 2 main programmes:
- Salix Energy Efficient Loans Scheme: The money saved through energy efficiency measures (new boiler, lighting, appliances, etc.) is used to pay back the loan.
- Recycling Loan: Funding from Salix matched by the organisation. Savings from energy efficiency are paid back into the loan (hence ‘recycling’) for further energy efficiency projects.
Note that on 1 April 2021 the Salix Energy Efficiency Loan Scheme was replaced by the Public Sector Decarbonisation Scheme (PSDS), which is a grant rather than a loan scheme. Currently the scheme is closed to new applicants.
For the recycling loan, on average, projects have been repaid in 3.7 years, and the size of the fund ranges from £100,000 to over £1 million. A typical fund size would be £500,000 with Salix providing £250,000 and the client funding the other half. Salix publishes a quarterly report for the Recycling Fund called ‘The Salix League’, a series of league tables that focus on 7 delivery measures across all recycling fund clients, including ‘spend rate’ and ‘use of available funds’.
In general, however, in order to qualify for a Salix loan, a project must have a short payback period and represent good value for money in terms of carbon savings.
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