SHDF Wave 3 – what’s new and how Sava can support you.
Building on the success of previous waves, the Department for Energy Security and Net Zero (DESNZ) has announced the launch of Wave 3 of the Social Housing Decarbonisation Fund (SHDF). With over £1.25bn available, social landlords are invited to bid for funding to improve the energy efficiency of their housing stock. Although the application opening date is yet to be announced, the SHDF Wave 3 delivery window extends until 30th September 2028, with all grant funding required to be spent by 31st March 2028.
What’s New with SHDF Wave 3?
SHDF Wave 3 introduces two application routes: Challenge Funding and Strategic Partnerships. Eligible organisations can apply directly through the Challenge Funding route, while those with a proven track record of delivering large-scale projects may opt for the Strategic Partnerships route. This new phase aims to significantly reduce the number of households in fuel poverty by enhancing the energy efficiency of social homes currently below EPC band C, thus reducing energy bills and contributing to the UK’s Net Zero target by 2050.
The key objectives of SHDF Wave 3 are to:
- Deliver cost-effective carbon savings, contributing to the UK’s carbon budgets.
- Improve the comfort, health, and wellbeing of social housing tenants by providing warmer, more energy-efficient homes.
- Support economic resilience and create growth in the retrofit supply chain.
- Upskill social landlords in retrofit to support future energy efficiency improvements.
SHDF Wave 3 Requirements
To be eligible, applications must meet the following criteria:
- Minimum Number of Homes: Wave 3 Challenge Fund applications must include a minimum of 100 eligible social housing properties at EPC band D-G per application, except for small social housing landlords (those owning or managing fewer than 1,000 homes) who can apply with fewer homes and are encouraged to join consortia to reach the 100-home target.
- Revisiting Homes: Homes previously treated in SHDF Wave 1 or the SHDF Demonstrator are eligible for Wave 3 if they comply with the eligibility requirements and only if installing low carbon heating measures. Homes treated in SHDF Wave 2 are not eligible.
- Strategic Partnerships: Applicants opting for this route are expected to propose projects of significant scale, retrofitting multiple thousands of homes.
- Eligible Properties: All existing social housing below EPC band C is eligible, regardless of archetype. Non-social homes can be included on an infill basis, with certain limits (up to 30% of a bid and up to 70% within a block/terrace). Homes at or above EPC band C can be included if installing low carbon heating measures, limited to 10% of the bid.
- Eligible Installers: All installers must be TrustMark registered or equivalent, and compliant with corresponding requirements. Measures must be lodged in the TrustMark data warehouse.
- Performance Outcomes: Grant recipients must improve their social homes to at least a minimum energy efficiency rating of EPC band C unless it is not feasible within the cost caps. In such cases, homes should attain the highest EPC grade achievable within the caps.
- Cost Caps and Funding: There is a single cost cap for energy efficiency measures of £7,500 per home, which can be averaged across homes in a bid. For low carbon heating measures in homes off the gas grid, the cap is also £7,500. There is an optional £20,000 grant for low-carbon heating in homes on the gas grid, limited to 10% of homes in a bid.
- Mixed Tenure and Non-Social Homes: Mixed tenure blocks/terraces must include at least 30% social homes. The costs for non-social homes must be incorporated into the application as for any other home.
Full SHDF Wave 3 guidance can be found here.
Sava’s Support and Success in SHDF Wave 2.1
In March 2023, the Government announced the successful bids for Wave 2.1 of the SHDF, awarding £1.4 billion to social housing providers, local authorities, and charities. This funding awarded a total of £2.5 billion with match funding on top from applicants.
Sava customers significantly benefited from this initiative, collectively receiving £245 million in funding in Wave 2.1. Notably, Sava supported nine organisations, helping them secure £74 million through our analytics services. Sanctuary Housing Association, one of the largest recipients with £40.4 million, will use the funding to retrofit 5,000 homes. Sava’s Intelligent Energy software played a crucial role in refining the data for their successful bid. Soha, another Sava customer, secured £1.7 million and praised Sava for the pivotal reports produced for their bid.
If your organisation is looking to prepare for SHDF Wave 3, our Analytics team is ready to assist you in developing comprehensive plans to support your bids. We offer a range of services including data analysis, assistance with zero carbon goals, and providing strategic advice and research. For more information on how Sava can help, please contact us at technology@sava.co.uk or visit our website.