On 20 July 2022, the Department for Business, Energy and Industrial Strategy (“BEIS”) published Competition Guidance Notes and FAQs for Social Housing Decarbonisation Fund Wave 2.1.
It is important to note that this latest announcement still provides indicative dates for the Wave 2.1 milestones. BEIS intend to finalise dates and publish updated competition documents as soon as possible, following an initial “Clarification Period” between now and 12 August 2022.
This comes immediately after the High Court ruling that the Government’s Net Zero Strategy breached its statutory obligations under the Climate Change Act 2008.
An initial review indicates that whilst a lot of work needs to be done by the Government (BEIS in particular) to update the Strategy and ensure that the delivery pathway to Net Zero by 2050 is sufficiently qualified and quantified, this should not derail or otherwise impact specific initiatives, such as SHDF Wave 2.1, which have been put in place to assist with decarbonisation of social housing, as part of the Heat and Buildings Strategy 2021.
SHDF – what is Wave 2.1 and how will it work?
There are roughly 24m homes in England, of which c.4m (1 in 6) are social homes. Of those 4m homes, 1.4m are considered to be below Energy Performance Certificate (“EPC”) Band C – with 1.2m within Band D, 105,000 in Band E and 45,000 in Bands F and G.
The 2019 Conservative Manifesto includes a proposed spend of £3.8bn on Social Housing Decarbonisation over a 10-year period, to improve the energy performance of social rented homes.
To date, just under £240m has been made available to deliver new, innovative retrofit projects for social housing through the “Demonstrator Fund” (£60m) and Wave 1 of the “Social Housing Decarbonisation Fund” (£179m).
SHDF Wave 2.1, set to open in late August 2022, offers a further £800m for the 3-year period 2022-2025.
Wave 2.1: intended timeline and policy
The Wave 2.1 funding timeline is expected to proceed as follows:
- Guidance has just been published (20 July 2022) – a further article on the implications and key points to note from the Guidance Note, as well as details surrounding: (i) the Wave 2.1 application form; (ii) further FAQs; (iii) the proposed Grant Funding Agreement; (iv) Grant Offer Letter; and (v) Data Sharing Agreement will follow on from this initial summary;
- The Clarification Period for bids ends 12 August 2022;
- Final documents (guidance, FAQs, application form) to be published post-Clarification Period late August, early September;
- Bid competition is set to be launched late August, early September 2022;
- Bidders for funding will have only 8 weeks from the launch date to submit their bids;
- Application submission details published early-mid October 2022;
- Application submission opens at least 5 working days before the competition closes;
- Bids will be assessed by the end of November 2022;
- Successful bidders / projects will be notified in February 2023;
- Grant funding agreements to be signed and projects to start from February 2023;
- Projects to be completed by March 2025.
Eligibility criteria
Bids will only be considered if:
- Proposed projects are located in England;
- Projects are led by either a Local Authority, a Combined Authority, or a Registered Provider of Social Housing (“RP”) – non-registered RPs that are Arms-Length Management Organisations can only apply as part of a consortium, which must be led by a Local Authority, Combined Authority or an RP;
- Projects include a minimum of 100 social homes (consortium bids are welcomed if a bidder is unable to meet the minimum property threshold);
- The majority (minimum 90%) of social homes within the bid have an Energy Efficient Rating (“EER”) of “D” or below. Up to 10% of homes included within Wave 2.1 bids can be at EER C+, on an infill basis where – (a) social homes below EEE B and C would be adversely affected without the retrofit of the EER C+ homes – and (b) measures installed are only those required for a whole block approach to retrofit (such as insulation and associated ventilation).
It should be noted there is no income-related eligibility criteria for social housing tenants. This funding does, however, focus only on social housing. All non-domestic buildings are precluded from SHDF funding.
What is expected of successful Wave 2.1 bidders under the policy?
- RPs must improve stock using a “fabric first” approach, to reach EER C (although, if it is not possible to raise the EER to C, for example in homes rated F and/or G, an improvement to EER D will be accepted with reasonable justification).
- RPs will be asked to contribute a minimum of 50% of eligible costs in co-funding.
What should you do now (if you have not already done it)?
As soon as possible – as there is little time between now and August to get bids ready and optimal for the purposes of success:
- Data analysis: undertake a comprehensive review of all stock from an energy performance / energy efficiency perspective. Are your buildings at EER C or better?
- Identify projects capable of being retrofitted.
- Get internal stakeholder approval – prepare business cases ASAP.
- Consider whether to make a bid with another eligible bidder and how you will bid together (i.e through a consortium, which we consider in further detail below).
- Prepare a procurement strategy to underpin the retrofit works (which is the reason for getting funding from SHDF Wave 2.1).
- Write the bid (and allow sufficient time for an independent review to critique and improve it – optimising chances of success).
- Submit the bid by the end of October / beginning of November.
Additional support can be found using the Social Housing Retrofit Accelerator – which directly helps RPs to develop their bids. This service, which is free and funded by BEIS, provides knowledge, resources, one-to-one support, and assistance with self-assessments.
Visit: https://socialhousingretrofit.org.uk/ for more details.
Consortium bids are likely to stand a better chance of receiving funding
The SHDF tends to favour consortium bids when assessing applications, as the inherent collaborative working across the bid supports the requirement to build or retrofit at scale and pace, thereby unlocking efficiencies and delivering benefits to residents and communities. Further, a consortium approach makes best use of the strengths of each different organisation, providing strategic continuity, which could help to unlock different sources of funding or support.
For more detail on how we can assist with consortium bids, please contact James Grinstead. Likewise, if you wish to discuss your decarbonisation journey, regardless of how far along in the process you are, our specialist Sustainability Team is here to help.
