£3.8bn of funding was promised by the UK government to improve the energy performance of social housing stock, to contribute to the goal of reaching Net Zero by 2050. The Social Housing Decarbonisation Fund (SHDF) is being rolled out over a 10-year period and will “deliver warm, energy-efficient homes, reduce carbon emissions and fuel bills, tackle fuel poverty, and support green jobs”.
The first wave is in progress with retrofit works currently taking place. The second was allocated £800m worth of funding in the 2021 Spending Review settlement. The Wave 2.1 competition will look to allocate as much of this funding as possible to support the installation of energy performance measures in social homes in England.
What performance considerations will be in place?
For the SHDF to be successful, certain conditions will need to be met for the outcome of each retrofit project. Providers will need to prove the following outcomes:
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At least an EPC C (SAP69) except F/G homes that cannot reach this level (EPC D SAP55).
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Reach space heating demand level of 90kwh/m2/year where reasonable, however, this is not a definitive element.
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The PAS2035 Standard was adhered to throughout the project, ensuring safety and quality.
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That the retrofit provider is TrustMark accredited.
What are the differences between wave 1 and 2?
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The minimum bid size is now 100 social properties on their own or as a consortium at EPC D-G.
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Registered Providers do not need to be a Local Authority Bidder, Arms-Length Management Organisations can also apply.
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The delivery window is 2 years (to 31st March 2025), as opposed to 1 year in the first wave.
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Cost caps are now both EPC Band and Wall Type.
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Renewables have an additional element; however, organisations must show a bill reduction and fabric first approach is taken before.
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Co-Funding is now 50% overall as opposed to scaled dependent on EPC rating.
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A separate element for Low Carbon Heating - Further funds are available to install heating source alternatives to gas.
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10% of the bid can be EPC C+ (providing 90% of neighbouring properties are EPC D-G), however, 30% of homes can be non-social (leaseholders/shared ownership) also providing the social aspect of the bid size is met (100 homes at D-G).
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As this scheme is interested in ongoing fuel poverty issues, income doesn’t have to be under the national median household wage of £30,000 anymore unless non-social (leaseholders/shared ownership).
What funding is available for the second wave?
There will be a 50% co-funding on measure installation cost with considerations for EPC, Wall Type and Additional Low Carbon Heating if needed. See figure 1 for futher clarification:
Figure 1
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The fabric first approach has been split into wall type and EPC rating with sliding scale, however additional low carbon heating can be used (£7k cap) if fabric has been done prior/sufficient improvements already taken.
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15% of the total bid can be used for project management, EPC’s, PAS2035 assessments and aftercare costs.
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2% of the total bid (£600k maximum) can be used for digitalisation of homes (i.e IoT, BIM, energy efficiency management tools, stock modelling etc)
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The funding mix can be used with ECO, HUG and Sustainable Warmth money. It can’t be used for previous SHDF funding.
Additional Bid Considerations
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The application will need to measure what is installed, with a detailed cost breakdown, justification and evidence.
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Resident support and information suitability will be asked for during retrofit.
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Financial viability and delivery assurance will be asked for again on the application form.
Lessons Learned from Wave 1
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An active resident engagement plan needs to be composed; cold calling/post is not accepted.
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Local Authorities need to be consulted at the earliest opportunity for planning permission (even prior to bid submission).
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Early engagement with suppliers is required (even with 2 step process) to understand market price/timelines.
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Back up properties are required to combat resident refusals.
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An understanding of PAS and decarbonisation retrofit is required for applicants, achieved through utilising relevant resources.
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Bids should align their operations to their long-term net zero strategies
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Applicants should plan for the movement of services within bids i.e power cables, meter boxes
Indicative Timeline
Figure 2
Source: Jon Daley, Magenta Living.
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