What is the Social Housing Decarbonisation Fund?

The Social Housing Decarbonisation Fund (SHDF), which began accepting applications on August 23rd 2021, has now been in operation for over two years. How has this government initiative progressed since its launch? And - for the uninitiated - what actually is this fund?

What is the Social Housing Decarbonisation Fund?

SHDF is a government initiative designed to enhance energy efficiency, tackle fuel poverty, and reduce carbon emissions in social housing. Its overarching objective is to create sustainable and cost-effective living environments for residents while aligning with the UK's net-zero target of 2050.

The government proposed a £3.6 billion fund over a period of ten years to improve the energy performance of social housing stock. In 2020, a £62 million fund was announced, followed by £160 million for the first wave of the SHDF initiative in the 2021 financial year, with delivery expected by January 2023.

How does the fund work?

The fund follows a 'fabric first' principle, where the improvement of the physical structure of a building is prioritised before implementing other energy-saving measures. The objective is to enhance housing stock to meet a minimum Energy Performance Certificate (EPC) grade of C.

This objective emphasises enhancing the building's insulation and overall construction to improve energy efficiency. Fossil fuel heating systems are considered ineligible, while low carbon heating systems are encouraged.

But what do these energy efficiency upgrades actually include?

• Insulation such as cavity walls, solid walls, lofts, windows and door replacements
• Heating systems
• Water efficiency devices
• Renewable energy systems, such as solar panels and heat pumps

How do I apply for the fund?

The fund is released in waves, with applications historically opening every November.

To access the fund, the application process is typically managed by your local authority. Registered providers of social housing and private registered providers (as part of an association led by local authorities) are eligible to apply for the SHDF. This incudes housing associations and registered charities.

If you live in social or council housing, you're well within your rights to write to your local authority to request that they apply for the fund.

How have funds been used?

Initial measures were expected to reduce space heating demand to 90kWh/m²/year, and save residents £220 - £400 per year on energy bills. Unfortunately, there have been unprecedented challenges with the rollout, along with instances of unused funds.

Despite rising energy costs and cost of living crises, at least £2.1 billion of the £6.6 billion allocated for energy efficiency measures remains unspent. In London, only four out of 12 authorities accessed £24 million from the SHDF to insulate council homes, and the initial progress was slow.

The failure to utilise allocated funds reflects challenges in implementing effective domestic policies and decarbonisation. And with the future of these policies up in the air, it's hard to know where SDHF will stand in several years.

There have been some positive movements in the last year however.

Wave 2.1 of the SHDF opened for applications on the 7th November 2022 on the 29th. Since then, the government has awarded £778 million to 107 projects, with an additional £1.1 billion provided in match funding.

In Northampton, a Whole House Retrofit Project costing £7.5 million, with £3 million from the SHDF, is retrofitting 150 homes with insulation, solar panels, and energy efficient systems.

The next wave (SHDF Wave 2.2) will open in November 2023. Funding will be rolled out from April 2023 over the next two years.

Update - October 2nd

The Energy Security and Net Zero Secretary, Claire Coutinho, announced an additional £80 million in funding to be made available through the Social Housing Decarbonisation Fund. According to the press release on Gov.UK:

• An extra 9,500 social housing tenants will benefit from grants to make homes warmer and more energy efficient.
• The additional funding will help lower bills by £240 a year on average and support 2,000 jobs.
• The scheme is already benefiting more than 100,000 households.

Summary: Success or elephant in the room?

While the Social Housing Decarbonisation Fund is a significant initiative to boost energy efficiency and decarbonisation in social housing, its slow progress, unused funds, and need for effective management underscore the challenges in achieving its objective. SHDF has the potential to improve housing in the UK - but the initiative requires continued commitment and thought-out implementation to succeed.