The Department for Business, Energy and Industrial Strategy opened bidding on 29 September 2022 for up to £1.5 billion through the Social Housing Decarbonisation Fund (SHDF) and the Home Upgrade Grant (HUG), allowing social housing providers and local authorities to submit bids for funding to upgrade around 130,000 low-income and social households in England1. The department said the upgrades would help households save around £400 to £700 a year on their energy bills at current prices, and that the funding could support around 19,000 green energy sector jobs1.
The money is split between the two schemes. Up to £800 million of SHDF wave 2 grant funding will see around 100,000 social homes receive energy efficiency upgrades, with estimated average energy bill reductions of around £400 a year at current prices1. The grant funding will have to be matched by those applying, doubling the investment under the SHDF scheme to around £1.6 billion1. The HUG funding will see up to £700 million available for local authorities to install energy efficiency measures in around 30,000 properties, with estimated average annual savings for low-income households of around £700 at current prices1.
| Scheme | Funding | Homes | Estimated average annual saving |
|---|---|---|---|
| SHDF wave 2 | Up to £800 million | Around 100,000 social homes | Around £400 |
| Home Upgrade Grant | Up to £700 million | Around 30,000 properties | Around £700 |
Eligibility differs by scheme. Social housing with an Energy Performance Certificate rating of D or lower will be eligible for SHDF upgrades, while HUG funding will help people most vulnerable to fuel poverty, living in privately-owned rented and owner-occupied off gas-grid homes and on low incomes1. The department said today's funding will see the installation of measures such as external wall and loft insulation, energy efficient doors and windows, heat pumps and solar panels, with multiple measures often installed in a single home1. Elmhurst Energy reported that PAS 2035:2019 will need to be adopted within all projects delivered under both SHDF and HUG, meaning applicants will need to work with TrustMark approved retrofit professionals and installers2.
Business and Energy Secretary Jacob Rees-Mogg said:
"By making homes warmer and cheaper to live in, we are not only transforming the lives of households across England, we are creating huge growth in the economy, backing the green energy sector and supporting thousands of high-skilled jobs."
The announcement builds on earlier rounds. A total of 69 projects were awarded funding in Wave 1 of the SHDF in February 2022, with £179 million upgrading up to 20,000 social housing properties1. Elmhurst Energy reported that Phase 1 of the Home Upgrade Grant saw £218 million awarded to local authorities2. The £62 million SHDF demonstrator project launched in 2020 and will improve the energy efficiency of up to 2,000 social homes to at least EPC Band C1. The department said the cash boost forms part of £12 billion combined funding under the government's Help to Heat schemes1.
Why it matters for households
The funding does not go to households directly. Bids come from local authorities and social housing providers, so a home's inclusion depends on its landlord or council securing a grant and delivering the work. For social tenants in homes rated EPC D or lower, and for low-income households off the gas grid in privately-owned homes, the schemes are the route through which insulation, glazing, heat pumps and solar panels may be installed at no direct cost to the occupant. The department's own estimate of £400 to £700 a year in bill savings at current prices indicates the scale of reduction possible where a property is upgraded, though the actual figure will depend on the measures installed and how much energy the household uses. Energy efficiency improvements of this kind reduce the amount of energy a home needs to stay warm, which lowers exposure to unit prices over time. The Energy Price Guarantee, which limits the amount consumers can be charged for each unit of gas and electricity, applies from 1 October1.
What happens next
Local authorities and social housing providers can submit bids for funding and will deliver upgrades from early next year until March 20251. Elmhurst Energy reported that local authorities and social housing providers can now submit bids2. The government has not reported the closing date for bids in these pages.