Funding Options - Public Sector Retrofit and Decarbonisation Projects
As the drive for net zero and energy efficiency intensifies, public sector organisations are under growing pressure to retrofit and decarbonise their buildings. According to the UK government, heating in buildings accounts for around 23% of the UK’s total greenhouse gas emissions, the 2050 net zero target; public sector bodies must address this issue, particularly in social housing, NHS facilities, and council owned properties.
However, accessing the right retrofit funding options for these initiatives remains a significant challenge. This article provides a clear overview of the public sector decarbonisation funding schemes available to key stakeholders, from housing associations to councils and blue light services. It offers insights into addressing the retrofit and decarbonisation needs of public sector homes and buildings.
The urgent need for decarbonisation for public sector housing
The UK has approximately 5 million social homes, many failing to meet Energy Performance Certificate (EPC) band C standards. Retrofit stock is essential for reducing energy costs and improving living standards, with the government estimating that upgrading these homes could save tenants up to £500 annually on energy bills.
Meanwhile, council properties, including schools and emergency buildings, face challenges, with many constructed before introducing energy efficiency standards. The Public Sector Decarbonisation Scheme (PSDS) has been instrumental in enabling upgrades and helping reduce emissions while improving operational efficiency.
Who needs this?
The complexity of government retrofit grants often leaves key decision makers in roles such as Procurement Officers, Heads of Asset Management, Planned Works Managers, and Sustainability Leads searching for clarity. Whether you’re overseeing the planned works for a housing association or managing a sustainability strategy for a local council, understanding funding schemes for retrofitting public buildings is critical to driving successful projects that support energy efficient housing and public services.
Available funding schemes for retrofit and decarbonisation
Here’s a breakdown of the major funding programmes available to public sector clients for retrofit and decarbonisation projects:
- ECO4 Scheme
The Energy Company Obligation (ECO4) scheme is a government backed initiative to improve home energy efficiency, particularly for vulnerable or low income households.
Who’s eligible? Housing associations and councils with properties housing low income tenants or vulnerable populations.
What does it cover? Energy saving measures such as insulation, heating upgrades, and renewable energy installations.
Key benefits: Reduces energy bills for tenants while enhancing sustainability metrics for public sector properties.
Impact: This scheme has already supported retrofitting of over 3.5 million homes since its inception in 2013.
- Home Upgrade Grant
The Home Upgrade Grant (HUG) scheme supports energy efficiency and low carbon heating for off-gas grid homes.
Who’s eligible? Local councils, housing associations, and public sector organisations managing homes without access to the main gas grid.
What does it cover? Insulation, energy efficient windows, heat pumps, and solar panels.
Key benefits: Focuses on improving homes in rural or harder to reach areas, ensuring equity in the UK’s energy transition.
Statistics: Approximately 10% of UK households are off the gas grid, highlighting the importance of this grant in addressing rural housing challenges.
- Public Sector Decarbonisation (PSDS) / Salix
Managed by Salix Finance, the PSDS provides grants to public sector organisations to fund building decarbonisation projects.
Who’s eligible? Blue light services, NHS trusts, councils, and other public sector bodies.
What does it cover? Energy efficiency measures, low carbon heating systems, and renewable energy installations.
Key benefits: Aimed at reducing direct emissions from public buildings, enabling organisations to lead by example in the UK’s net zero agenda.
Funding update: In its first two phases, the PSDS allocated over £2 billion to public sector projects.
- Warm Homes Social Housing
This fund supports the retrofit of social housing stock.
Who’s eligible? Housing associations and councils managing social housing.
What does it cover? Retrofit projects focusing on energy efficiency, insulation, and heating upgrades to meet EPC band C or better.
Key benefits: Improves living standards for tenants while reducing long-term energy costs and supporting the development of sustainable housing solutions.
Future plans: The government will commit £3.8 billion to this fund by 2030.
- Great British Insulation Scheme
This funding is for insulating homes to improve thermal efficiency and reduce energy demand.
Who’s eligible? Councils and housing associations managing a large stock of energy efficient homes.
What does it cover? Wall, loft, and floor insulation measures.
Key benefits: Provides scalable solutions for organisations managing large portfolios of older or poorly insulated properties, supporting energy efficient retrofitting at scale.
Challenges faced by the public sector
Despite the range of funding options, many organisations encounter hurdles in their retrofit and decarbonisation journey:
- Lack of awareness: Decision makers often need help to stay updated on evolving retrofit funding opportunities.
- Application complexity: Navigating the grant application process can be daunting without specialised expertise.
- Resource limitations: Many teams lack the capacity to thoroughly explore and secure funding.
How can LHC support your retrofit goals?
Through our procurement frameworks and expertise in public sector retrofit projects, LHC simplifies the path to securing funding and delivering energy efficient housing and building projects. Here’s how we can help:
Framework access: Our frameworks connect you with pre-approved contractors and suppliers, streamlining procurement for retrofit works.
Expert guidance: We advise navigating UK government energy funding schemes and aligning your projects with eligibility criteria.
Added value services: From planning to delivery, LHC ensures that projects are delivered on time, within budget, and to the highest standards of quality and compliance.
Achieve Net Zero targets with LHC
Understanding the UK retrofit funding landscape is the first step towards achieving sustainable, energy efficient public sector properties. LHC offers the tools and expertise to help you deliver impactful projects that align with the UK’s net zero goals.
Contact our team to learn more about the upcoming launch of the Retrofit and Decarbonisation (N9) Framework.
Sources:
- UK Government: Net Zero Strategy
- National Housing Federation: Energy Efficiency in Social Housing
- Energy Saving Trust: Benefits of Energy Efficiency
- Salix Finance: Public Sector Decarbonisation Scheme
- ECO Scheme: Energy Company Obligation
- HUG Scheme: Home Upgrade Grant
- BEIS: PSDS Impact Report
- Social Housing Decarbonisation Fund: Government Commitments
