Our 10 years in social housing retrofit has shown that capital alone won't solve retrofit finance challenges: the barriers are structural. Without understanding this, the Fund risks deploying money into a market that isn't yet ready to use it well.
Making the finance stack up for retrofit has long been a focus for us, and our approach has shifted over recent years to adapt to the policy landscape, landlord challenges and resident needs. This has included our recent Zero Carbon Accelerator (ZCA) market analysis, creating a solar-battery decision tool for a local authority landlord and now our Energising Assets collaboration with Healthy Homes Hub and Baringa.
Here are five highlights from our recent response to the Warm Homes Fund call for evidence in-line with this experience, research and stakeholder engagement:
Our market analysis has found multiple solar finance models and operational models needed to enable shared revenue. You can find examples of these in our Zero Carbon Accelerator Market Analysis report.
While some of these models are being delivered, the large-scale investment backed projects are not yet over the line. There are multiple and complex structural barriers – from fragmented delivery and misaligned incentives to the absence of system design and regulatory uncertainty. More capital won't fix this on its own, we need interventions that tackle these systemic challenges alongside.
The cost of finance for innovative models is killing otherwise viable projects. A loan guarantee mechanism to bring this down would, in many cases, be more strategically impactful than grant.
Our Energiesprong colleagues in Germany are seeing transformative progress in the German market. A loan guarantee mechanism (similar to the KfW model) would help bring rates lower and even with our higher bond rates would bring more projects into financeable range.
For council-owned stock, PWLB at the HRA rate remains among the cheapest finance available but to borrow through this councils still need to evidence revenue streams. The more projects that get delivered – helping the sector understand and manage risks – the more likely it is that councils will be able to use PWLB. This could allow councils to finance renewable investment on much of their own stock without alternative financing.
Our experience of retrofit delivery – paired with in-depth stakeholder engagement with landlords via our Transform-ER project - shows that business case development, payment mechanism pilots, contract development and risk management are the biggest challenges to be solved.
We’re already seeing a handful of bold landlords try new solutions and ways of working to tackle these barriers – and sharing their stories to encourage wider adoption – but we cannot rely on these pioneers to cover the early costs. By funding pre-capital investment, the Warm Homes Fund could help mobilise innovation at scale.
Solar and battery can deliver a significantly positive business case in social housing. The current push should build on this momentum - but the battery boom won't last forever, and serious heat decarbonisation is coming in the 2030s.
Modelling done via our Transform-ER project suggests many homes where solar and battery now is a 'no regrets' move: alleviating fuel poverty today and laying the groundwork for what comes next. Treating Phase 1 (solar/battery) and Phase 2 (fabric/heat) as distinct is pragmatic - but integration has real co-benefits: fewer disruptions, no second visits, and heat pump running costs that fall significantly when PV and battery are already in place.
The Warm Homes Fund's most important job is generating the learning that lets us do far more of what residents, the climate and the sector need in the years ahead.
