Social Housing Decarbonisation Fund (SHDF)

The Social Housing Decarbonisation Fund (SHDF) will help decarbonise a significant amount of social housing stock, subsidising measures such as ground source heating installations to tackle fuel poverty, reduce emissions and increase the energy efficiency of homes.

The first wave was set to deliver £160m of funding in the first year, and at least 50 housing associations will receive money to improve the energy efficiency of around 20,000 social homes.

A second wave of the fund is due to be launched in 2022 and will be worth £800m across three years. This page will be updated as more details are released.

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Tower blocks in Sunderland fitted with ground source heat pumps

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.

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.

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 by Jan 2023 (for the first wave).

Sign up to free CPD: Ground source heating

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

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Ground source heat pump case study

Decarbonising homes with Croydon Council

This project in Croydon is the perfect example of how Kensa’s ground source heat pumps are reducing carbon emissions and residents’ heating bills on a large scale. This follows Croydon’s declaration of a climate emergency, leading to a commitment to switch to the lowest carbon heating system.

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

SHDF Competition Guidance Notes - BEIS

Wave 1: bid & project deadlines

£160m is earmarked for this initial wave. The deadlines for wave 1 are as follows:

  • 23rd August 2021: First wave open for applications
  • 15th October 2021: Bidding closes
  • By end of December 2021: Successful projects notified
  • January 2022: Project can commence
  • January 2023: Project ends
DOWNLOAD WAVE 1 guidance notes

Future funding waves

Subject to treasury approval, we’re expecting three more waves to be released over the next 10 years. If you’re not ready for the first wave, it’s important to start preparing for future funding now.