Social Housing Decarbonisation Fund (SHDF)

The government committed to the Social Housing Decarbonisation Fund (SHDF) in 2019, with a proposed £3.8bn available over a 10-year period to help decarbonise a significant amount of social housing stock.

The fund subsidises measures such as ground source heat pump installations to tackle fuel poverty, reduce emissions and increase the energy efficiency of homes.

Kensa is urging local authorities and housing providers to work with us early and start preparing potential applications now to increase your chances of securing future funding to decarbonise your stock and tackle fuel poverty.

Current & Future Funding Waves

DESNZ has released a further £80 million of funding in Wave 2.2. The application deadline has been extended to 31st January 24.

In December 2023, it was announced that the Social Housing Decarbonisation Fund (SHDF) has been allocated £1.25 billion for Wave 3 to support up to 140,000 additional social homes

Previous Funding Waves

Wave 1, which ran in the financial year 2021/22, awarded £179 million of funding to 69 projects which will improve the energy performance of around 20,000 social homes.

Wave 2.1, which ran in the financial year 2022/23, awarded £778 million of funding to 107 projects. Successful projects were notified in spring 2023 and are now in process.


Get prepared now

Iain Carr, Domestic Director of Sales for Kensa Contracting explores How can social landlords benefit from the SHDF in his latest article.

To book a one-to-one feasibility study, fill in the details below:

Sign up and we’ll get in touch. Our experts will showcase the benefits of ground source heat pumps at scale, demonstrating how this eligible technology significantly reduces carbon emissions and household fuel bills.

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What will the funding cover?

Ground source heating

Besides energy efficiency measures such as insulation, ground source heating is eligible for the fund. We encourage local authorities to take advantage of this fund to invest in this lowest carbon heating system – proven to future-proof homes and relieve tenants of the ‘heat or eat’ ultimatum.

When paired with Shared Ground Loop Arrays – our modern-day, renewable alternative to traditional heating – individually-housed heat pumps can reduce heating bills across households, flats and tower blocks and eradicate expensive heat losses that often come with centralised systems. Government guidance for the first wave confirms:

BEIS reserves the right to prioritise the allocation of funding for Shared Ground Loops in applications that are compliant with all requirements.

The need for low-carbon heating is on the agenda. The government’s ten-point plan for a green industrial revolution includes the target to install 600,000 heat pumps a year by 2028. It makes sense to make the most of this fund now.

BEIS is committed to supporting the Shared Ground Loop market in social housing through [the] SHDF Wave

SHDF Wave 1 Competition Guidance Notes - BEIS

Applying for the SHDF: eligibility & assessment

Who can apply?

Local authorities, or registered providers of social housing in a consortium led by local authorities, can bid for funding to improve the energy performance of their social homes. The project must be within the competition scope and located within England, and it must be led by a local authority.

All social housing, regardless of archetype, including both on & off-gas grid, is eligible.

How is your application assessed?

The SHDF is a competition, scoring applicants on factors including value fit, deliverability and value for money.

Applicants must be able to demonstrate vital feasibility factors, including proof that you can bring together a strong delivery team, design and implement retrofits to improve energy performance of stock and meet targets, and coordinate to successfully deliver the project.

Key objectives of the SHDF

The SHDF will span ten years and be released in multiple waves. In this time, the overall aim is to upgrade social homes to an Energy Performance Certificate (EPC) rating of C. Currently, nearly 40% of properties fall below this, with fuel poverty posing a serious risk for residents when high fuel bills mean tough choices between eating or heating.

The fund will support the government’s target to reduce carbon emissions to net-zero by 2050. By funding efficient measures such as ground source heating, the lowest carbon heating system, the SHDF will:

  • deliver warm, energy-efficient homes
  • reduce carbon emissions and fuel bills
  • tackle fuel poverty
  • support green jobs.

Thurrock Council case study

Thurrock Council secured £3.2 million from Wave 1 of the Government’s Social Housing Decarbonisation Fund (SHDF) to help finance a ground source heat pump retrofit project that is set to reduce fuel bills by over 50% for some Thurrock residents and provide a 70%+ reduction in carbon emissions.

273 storage heaters across three tower blocks in Chadwell St Mary’s, Thurrock will be replaced with Kensa ground source heat pumps inside each flat, which will deliver three times more energy efficiency for the residents.

Read the case study

This funding has been specifically granted to deliver a trailblazing heating solution that is the first of its kind for Thurrock Council...a significantly better, cost-effective and greener solution.

Cllr Luke Spillman, Cabinet Member for Housing, Thurrock Council

Gravesham Borough Council case study

More than 350 homes owned by the council will have their energy efficiency improved after the authority successfully applied for money from the Government’s Social Housing Decarbonisation Fund. The council is one of only two in Kent to successfully apply to the fund and will receive a grant of £823,337.

Work has started on installing ground source heat pumps at two of Gravesham Borough Council’s housing developments as part of the authority’s work towards achieving net-zero status by 2030.

Read the case study
Borehole drilling, GraveshamBC_R

We are doing all we can to upgrade our homes and help us toward our net-zero target. The installation of ground source heat pumps will bring real benefits for the environment and our residents alike.

Cllr Jenny Wallace, Gravesham Borough Council’s Cabinet Member for Housing Services