Decarbonisation Fund Wave 2.1 : We asked our experts

In this discussion our Business Development Manager, Aileen Gilchrist and Senior Consultant, Paul Leadbitter, talk about the social housing decarbonisation fund wave 2.1.

Paul recently took part in a workshop with the Department for Business Energy and Industrial (BEIS) strategy, where we joined with housing associations and combined authorities to help design what the application process will look like, what information will be required and what bidders will provide in order to make the application as smooth as possible. Paul talks further about his experience in the video below.

Click the video to watch the discussion, or read the transcript below:

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Video transcript

[Speaker 1]
Hi everyone. Thank you for joining us. My name is Aileen Gilchrist, and I am the Business Development Manager for Pennington choices. Today I'm here with our Senior Consultant Paul Leadbitter. And we will be talking about the social housing decarbonisation fund wave 2.1. Hi, Paul, how are you? 

[Speaker 2]
Yes I'm fine. Thank you. Good afternoon.

[Speaker 1]
Good afternoon. And so yeah, wave two of the decarbonisation fund, what is it? Who should be applying for it? How is it different to wave one? Let's just jump in and start from the beginning.

[Speaker 2]
Let's go. Let's take it from the top, so wave two of the social housing decarbonisation fund is a pot of £800 million that's been identified and provided by the government to address and respond to the climate challenge and try to achieve the net zero target that the government set. They say it's wave two, it follows on from the back of some successful demonstrate a scheme. So originally, there was £360 million worth of funding made available to a number of demonstrator pilot schemes that established the processes and established uninsured, what could be achieved through that. So that was £360 million worth of funding that had already been made available, wave one consisted of £179 million worth of funding. And there are a number of local authorities and other organisations that are currently delivering retrofits and net zero and then carbon reduction schemes across the country as we as we as we speak today.

So, wave 2.1, like it says the is the next round and as £800 million worth of funding being made available to organisations over the next three rounds of the government spending review. So in the first tranche, the application process opens very shortly, within the next couple of weeks, we're expecting the application pack to be issued, late August, early September, the guidance notes have just been updated and issued hence why wherever you listen to this conversation today, one of the key changes in the wave two funding application process is it's been opened up to a wider application body so that some more people can apply for the fund then previously. So, in the in the demonstrator in when in wave one, it was very much restricted to local authorities, to combined authorities, wave 2.1 has been opened up to registered social landlords, to social housing providers and to consortia around different providers. So, more access, more people can access the funds that are available in this wave of funding. Anybody any social housing provider that's not registered, can form a consortium and the document does. Or the guidance notes currently say that that should be a consortium that is led by a local authority. So, it opens it up. It's been made to, you know, open up to a wider a wider audience.

The application process, like I say starts probably beginning of September, early September. The dates are not quite confirmed yet. There's a consultation process ongoing at the moment around the application pack that actually closes on the 12th August. I mean, once they've closed that they've assessed what questions and comments have been raised around that then forbear to roll out the application. Thereafter, they're expecting the application process to run for a period of eight weeks from the competition launch. So there's no firm dates around that it's just a roughly a two month period to get your to get your applications in from that. Once bids are assessed, which they expect to take place around November time. Obviously, it's subject to slight little bit of movement across depending on when the competition launches, but bids will be assessed around November time, successful schemes and bidders will be notified around February 2023. And then grant funding agreements and the paperwork can start to be pulled together from February 2023. The delivery window is going to run for an initial two year period from February 2023 to the end of June 2025. That's right there. I think that's correct period. But with a requirement, the specific requirement in the guidance notes that all grant funding needs to be spent by the 31st March 2025. So under that, and basically what that means under the application process, the government and BEIS (Department for Business, Energy and Industrial Strategy) are expecting applicants to be funding 50% of any projects themselves and then the government will meet the other 50% so for all grant funding needs to be spent by the 31st March 2025. The remaining work if anything needs to be carried out up to the end of June. 2025 needs to be funded by the by the applicant themselves in that respect.

[Speaker 1]
Seems like, obviously, this is quite a new concept for a lot of people. And with this application window opening quite soon, eight weeks isn't a lot of time, especially for something so new. What? How does this application process work? I know that you went on a workshop, quite recently that was run by the Department for Business Energy and Industrial strategy. That's a mouthful. Tell us a bit more about that workshop who attended it? How did it go? Just give us a bit of background on that.

[Speaker 2]
So the workshop was initially was part of the consultation process in terms of understanding what that application pack would look like, what information would be required, what bidders would be required to be to provide so that the assessment process will be made easy. The workshop I went to was one of the very, very early sessions. So there was it was lots of early conversations around the level of information, the amount of pricing information, one of the biggest areas of discussion, to say on the day was how long that price would be fixed for now. For me, it provided the most consternation in the conversation, because there was an expectation that the price would be fixed for a long period of time. Now, we all appreciate the way that the construction and the market is at the moment, it's very, very difficult to fix prices for, you know, a short period of time never mind, three, potentially three year periods. So it's very, very difficult. So it'll be interesting to see what comes out in the final application pack in that in that respect. But it was all about organisations being able to assess and analyse the risk in delivering these projects. And in doing so understanding what data and the whole process around, you know, retrofits and deciding what the intended outcomes are going to be from your programs of work. The quality of data is really, really important. And it's being able to assess and analyse that data that you've got available, understanding what data might even be missing, and what is needed. And then being able to use that to establish the programs of work and effective programs work that are value for money. And that's really, really important.

And I think that's probably an area where Pennington Choices’ can greatly assist you know, with the experts, we've got across the business from an energy perspective from our technical and energy team, but also from our building surveying team and our stock condition team, that collection of data is something that we do we do every day. So if any organisations are of high identified that they've got some data missing, or the data is not to the quality, that the need to make that the proper analysis, then it's certainly a conversation that we're more than happy to have with organisations around where we can help and where we can support with that.

So it's about that data analysis, making sure that all of the information that you've got about your housing stock is, is valid, it's up to date, it's accurate. And it can be used, like I said, To properly determine what those intended outcomes on your on your program of retrofit is going to make this really, really important in that respect. So that was what the workshop was all about was all about analysing and understanding what's going to be required to put together a robust, viable bid that can deliver the outcomes of the of the scheme. 

[Speaker 1]
Was there anything in the workshop that, you know, took you by surprise, or any kind of top tips that you can, you know, advise, obviously, you've spoken about getting your data in order? Is there anything that you can think of from the top of your head that you thought, you know, that's a key theme there and should be, you know, really focused on when applying for a bit?

[Speaker 2]
Yeah, there was, there was a few things that come out of it. And it's particularly around the learnings from the wave one, you know, so the BEIS (Department for Business, Energy and Industrial Strategy) have been really, really keen to, and I'll say BEIS rather than trying to get that long, mouthful of Department of Business... So I'll say I'll say BEIS anyway, so sort of put it all together.

So wave 2.1, wave two of the social housing, decarbonisation fund, it's going to be a minimum bid of 100 properties. All those properties, or as many of those properties as possible should be below EPC, Level C. But they are going to permit small numbers of C and above. And it will only be relatively small numbers in the overall scheme. They're not going to allow large numbers of properties that are C and above. But it will only be where those properties are in existing blocks, or terraces of properties. So again, the analysing of that data and looking at the overall scheme is going to be going to be really, really important to that. If organisations are looking to do schemes with less than 100 properties, the advice in the guidance note is that there should join a consortium of, of organisations and pool of properties. Their aim is to get a fancy minimum through it. So therefore they're looking at a fabric first approach solution to the majority of these, properties.

So that's really probably one of the biggest changes, that's, that's come about from it. Some of the other areas, that they've used as part of the wave two is around the key objectives of the of the overall scheme. So the overall objectives is obviously to reduce carbon emissions, you know, to address that climate change. Priority, the, there's a key objective around the comfort and wellbeing of residents within the property. So they want to address that, and they want to make sure that, you know, residents are feeling the benefit of that. Fuel poverty is obviously, you know, we, we all know, what the, what the markets like there at the moment of fuel poverty is, is massive now, and it's going to become even more so for a lot more people later this year and into next year. So make sure that those areas are addressed as well. But also, BEIS are really keen to link the social housing decarbonisation fund into supporting the green economy, to bring trades through to bring innovation through to bring good practice to encourage employment in the sector, to you know, get people up skilled into being able to deliver this this work.

So they're sort of in outline the main objectives and the main priorities. And this whole wave two really is focused on being that and I think one of the key messages that taken away from that workshop and from a number of other sessions is the government are looking for people to be ambitious, you know, it's an £800 million program, we've got a climate change crisis, we've got a fuel poverty crisis looming, and the housing sector alone, has conservatively estimated that it's going to take about £100 billion worth of investment to bring properties up to the level that the needs be in terms of EPC and, and emissions and the like. So, so be ambitious, you know, look at you're looking at programs, look at the data, look at what can be delivered. But I guess some of the some of the other lessons that have come from the way of one funding is make sure tenants are engaged with your tenants have got some really, really valid knowledge and insight into what their issues are, what solutions would work for them, what level of disruption that customers and residents will be prepared to put up with in this work as I think we'd all appreciate, and know that, you know, retrofitting is not going to be as straightforward. There's going to be some disruptive work carried out in everybody's property. So make sure tenants are engaged, tenants can add some really valuable insight into the program.

Make sure we're in considering any program that a proper consideration has been made around the planning issues. Because I think there was an both in the demonstrator and in the in the wave one schemes, planning issues of delayed programs of delayed delivery. And when you're looking at the scale of program that needs to be delivered, here, dealing with those issues as early as possible. So early engagement with Planning Officers, early engagement with the local planning authority will be key to understand what impact potentially it's going to have on programs work.

Engage with the supply chain. We've said before, it's a very competitive and a very, I say complex market out there in construction and in energy efficiency at the minute, you know, people are very busy. There's a shortage of materials, you know. So early engagement with supply chain and getting the supply chain on board as early as possible as potential partners might be a potential option for people to think about. So that you know when schemes come and delivery is required in that , you know, that relatively short window, everything's lined up and ready and ready to go with that.

We touched on resources and the scarcity of materials resources are scarce as well out there as well. And we all know that within the supply chain, but also within organisations. And I think it's really, really important that organisations understand what the team makeup needs to be to deliver these retrofit programs. Pas 2035 is going to have a large role,  Pas 2035 and Pas 2030 are going to have a large role in the delivery of retrofit works. Organisations need to have competent and qualified individuals in the team that can help manage that process. And that's going to be really, really important, again, it's a conversation that Pennington Choices will be more than happy to have with organisations in terms of where can we support we've got, you know, we've got resources who can support in those areas. So let's have a conversation with organisations that are that are have identified that there are, you know, scarcity of resource within their within their teams.

And also, as part of the workshop and some of the lessons, organisations should be aware that there needs to be an appropriate level of contingency, built into the into the budgets for these schemes and built into the, to the applications. It's a changing, it's a changing market, technology technologies are changing, technology is advancing, there's more competition out there, the scarcity of material. So it's really, really important that organisations look at the overall risk profile and do proper risk assessment, and have in place a proper risk management process that will allow them to identify what potential issues could arise, you know, what potential issues will arise and what's over the horizon, what's coming in their direction, and be prepared to respond to it, make sure it's reflected within the within the bid.

And the whole thing just needs to be aligned with the net zero. So government target net zero towards 2050, reducing our reliance on fossil fuels and the like, target by 2050, legally, the target is around 2035, to make sure that we're a net zero economy or as close to zero as economy as we can. Organisations at every level within the within the housing sector, and other sectors will have net zero strategies within their organisation, it's really essential that any bid in any funding application is aligned with those overall strategies, the intended outcomes of a retrofit program should align with the overall Net Zero strategy of the organisation and it's really important as part of the preparation process that those objectives and those outcomes are reviewed and carefully aligned so that there's not a you don't go off in one direction under the funding and it doesn't align with the organisation's.

[Speaker 1]
So going back to your note, we've touched on it briefly, and you've just mentioned that they're in preparation for application. In a nutshell, what should be in your shopping basket, as you're moving towards applying for funding? You know, you've spoken about data. So first thing is you've got to have your EPCs, you know, up to date, etc etc.. Retrofit assessments, is that before a middle or an after, where does that come in? You know,  what's the checklist in the run up to applying for this funding? Because obviously, it's mid August as it is, and I'm sure that there will be a lot of people in this position where they think, Gosh, I need to get some skates on here.

[Speaker 2]
Yeah, so there's a it's a really good point. And I think there's a number of areas that organisations need to be thinking of and need to be need to be aware of so, so very simplistic terms set out in embarking on this process. And now I would, I would, I would like to think in a utopian real world, utopian world, there will be there with some of these issues, and some of these conversations will have taken place. But I recognise that there'll be lots of organisations, and that's really where, where it hasn't. So you, we need to have senior level buy in. So the decision makers, the key stakeholders within an organisation need to be on board, you know, everybody needs to be signed up to what it is we're trying to trying to deliver through a retrofit program and what you know, what decisions need to be taken, what technical support is required, you know, how we're going to measure success. So everybody's clear in terms of what will good look like at the end of this, the end of this, this program, the right team needs to be having, you know, I talked about it before about having the right qualified individuals within the team to deliver against the 2035 and 2030. But beyond that, the whole team needs to be in place right away from senior leaders at the top to the project managers to the delivers to the to the resident engagement to the communication staff, everybody across that team needs to be in place and aware of what the challenges are that all the values are there and everything's aligned, and everybody can work together to deliver those intent intended outcomes.

Then you get into the details. So once you've got all of that arranged, then you get into the detail. This is where the data comes in. So are you in a position to carry out the appropriate level of stock analysis? Do you fully understand what you've got? What's the baseline position in terms of energy efficiency, what's the starting point? You know, you can then decide on what your target outcomes are going to be under a retrofit scheme. So understanding that standpoint in the context of the strategic objectives of the organisation, what are your key drivers going to be? What is it we're looking to achieve out of that scheme that will deliver those intended outcomes or deliver the right results for your housing stock. So linking the, you know, the overall asset management strategy into the intended outcomes and into the organisational outcomes is, is key to the whole thing.

Again, make sure it's managed to make sure it's, you know, what will good look like when those outcomes are in place, you know, an example might be that an organisation might be setting out to improve the average EPC rating across the whole of their stock. So the level of intervention will be appropriate to increasing that average EPC across the whole stock, that's a different program to an objective being, well, we've got a particular estate that has got stock on there, that is in a really bad starting point, from an energy efficiency perspective, therefore, we're going to have a massive investment on those 15, 20, 30 properties. And that's a different type of program to that to increase in the average. So everything's got to be, everything's got to be aligned and contextualised, within the overall organisation's strategy, really on that.

From doing all of that information, using the data, understanding that the strategic context can identify your target properties. Decide you need to decide whether those properties that property selection process is going to be data lead, it's going to be resident lead, it's going to be area, lead, or perhaps a combination of all of those. So it's really important that this whole process is set out is mapped out and understood how you're going to get to that point, where is it going to be the 15 or 30 properties that need that massive investment? Or is there going to be a wider pool that's going to drag the EPC rating up to C. So you'll have a different approach to that.

Once you've done that, you then move into your preliminary design stage. So what levels of intervention is required, and what of energy efficiency measures are going to be installed to each of those individual properties, your compliance with PAS 2035, and everything else? And then that then sits with that, throughout all of these steps, as I mentioned before, we need to be carrying out a risk assessment, understanding what challenges and issues may be faced, how are you going to mitigate them? And how are you going to deal with the residual risk that's there, once all of that's, that's done.

In parallel with all of this, we also need to have a resident engagement process and I said, how important having the residents on board is. Let's communicate well with them, map the journey out what are the key touch points is going to be you know, how they're going to be disrupted by the program? What knowledge and important insights have they got into developing the solution? You know, so, so making sure whether it's, you know, the residents have got a voice in the whole process. That's really, really important.

[Speaker 1]
And I suppose it's also, you know, beginning that journey of the culture change, because obviously, you know, we're about to change the way that people live, you know, we're entering a new era, and people need to, we need to learn to, to live this new way, in order for it to work. You know, it's, we have to stop drying our socks on the radiators, small as that and as big as other things. So, I think that is really, you know, big key takeaway from that, that's really interesting,

[Speaker 2]
The big education piece to be had, you know, right across the board. So, you've got emerging technologies, you know, you've got new solutions that a lot of people won't be up to speed with. And, you know, what I've seen before, so, so it's educating them in that process. But it's also, you know, really important that from an ongoing maintenance perspective, residents are educated on the proper use, so that, you know, from a repairs and maintenance perspective, it doesn't put pressures elsewhere in an organisation after this work is carried out.

[Speaker 1]
Yeah. And I think that's, you know, probably why the collaboration and you know, partnering with your tenants is so important, engaging with them early, so that, you know, they understand the journey as it goes along, not just at the point where you need access. So, that's really interesting. Thank you so much for that, Paul. As you know, if anyone would like any more information about what we've just spoken about, you can contact us via the website, and Paul is always on hand. Paul is leading our services on decarbonisation, all things retrofit. So please do get in contact. If you'd like to have a chat with all if you've got any questions or queries. On the back of this discussion. please do get in touch. Thanks very much Paul, I hope you enjoy the rest of your day.

[Speaker 2]
Thank you very much. Thank you everybody.