Government releases an additional £1.25bn for the Social Housing Decarbonisation Fund

The government announced today that a further £1.25bn will be allocated to the Social Housing Decarbonisation Fund (SHDF), which will be used to insulate or retrofit 140,000 homes between 2025 and 2028.

In the autumn statement 2022, chancellor Jeremy Hunt said that a further £6bn would be allocated to driving energy efficiency measures in buildings and industry.

Today, the Department for Energy Security and Net Zero (DESNZ) has outlined how the £6bn in funding for 2025-2028 will be allocated.

The government’s announcement on the release of further funding for the SHDF follows calls by housing sector bodies such as the National Housing Federation, The Housing Forum and The National Home Decarbonisation Group (NHDG) to release all the funding for the SHDF in one go, rather than allocating it gradually through waves.

Under wave 1 of the SHDF, the government offered £179m to 29 projects, while in wave 2.1 £778m was granted, and wave 2.2’s top-up competition will distribute £80m of grant funding by April 2024.

On the funding announcement, CIH’s chief executive Gavin Smart, said: “With high energy prices here to stay, improving the energy efficiency of our homes is one of the surest ways of cutting carbon, reducing fuel poverty, and improving housing quality.

“That’s why CIH has continually called for additional government investment in energy efficiency schemes, and we are delighted to see these announcements, especially the largest wave of the Social Housing Decarbonisation Fund to date.

”The announcements recognise the leading role that local authorities and housing associations have played in pioneering the retrofit of existing homes, enabling beneficiaries to live warmer, healthier, and happier lives.”

Kate Henderson, chief executive of the National Housing Federation, said: “In September we wrote to secretary of state Claire Coutinho, urging the government to release this funding and recommit to its manifesto pledge on net zero. It’s great to see that the government has listened, and by providing this additional funding, social landlords will be able to plan and invest in further retrofit works that will help lift residents out of fuel poverty, ensuring they live in warm homes that are affordable to heat.”

The government also announced a further £1.5bn will be allocated to the boiler upgrade scheme, to help households in England and Wales replace gas boilers with heat pumps.

A £400m grant for household energy efficiency, launching in 2025, will fund improved insulation and larger radiators.

The government has also committed £500m to a new local authority retrofit scheme, which it said will support up to 60,000 low-income and cold homes, with measures such as insulation. 

Claire Coutinho, energy secretary. said that the funding for the SHDF and local authority retrofit scheme “will help us go even further and improve 200,000 cold, low income and social homes”.

Other funding announced included £485m for the Green Heat Network Fund, to help up to 60,000 homes and buildings access affordable, low carbon heating through new heat networks.

The Heat Network Efficiency Scheme has been allocated £45m to improve around 100 existing heat networks.

The Industrial Energy Transformation Fund, which will receive £225 million, will continue to help businesses transition to a low-carbon future.

Richard McWilliams, director of sustainability at Turner & Townsend, said: “The breadth of the package is particularly important.  These measures address homes, public sector buildings, heat networks and more.  This shows the Government is aware of how holistic our solutions to the retrofit challenge need to be.  It’s not only about an individual building – it’s about whole areas being upgraded and networked together.  The industry needs to step up and respond in kind.  We should work together across the sector to develop coordinated area-based strategies, scope out our skills and capacities, and present these to Government.  Through this we can maximise the impact of this funding and deliver the retrofit revolution we need.”

See also >> Energy secretary announces £80m for social housing insulation

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