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Competition watchdog to assess SHDF Wave 3 under Subsidy Control Act
The Competition and Markets Authority (CMA) is assessing a government department’s compliance against legal requirements for the latest wave of the Social Housing Decarbonisation Fund (SHDF).
The watchdog is evaluating a new subsidy being proposed by the Department for Energy Security and Net Zero (DESNZ) for inclusion in Wave 3 of the SHDF.
A total of £1.21bn will be spent on the latest wave of the scheme, which distributes grant to housing providers to spend on energy efficiency upgrades.
Wave 3 offers more flexibility than previous waves of the SHDF, as well as an optional grant incentive for landlords who upgrade homes on the gas grid to low-carbon heat systems.
Under the Subsidy Control Act 2022, which came into effect last year, the CMA provides non-binding reports to public authorities on certain subsidies, at the authority’s request.
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These reports evaluate the public authority’s assessment of compliance against legal requirements.
The Subsidy Control Act sets out the legal framework for awarding subsidies after Brexit.
The proposed SHDF Wave 3 was referred to the CMA by DESNZ.
The CMA’s subsidy advice unit will prepare a report evaluating DESNZ’s assessment of whether the subsidy complies with requirements.
It will complete its report within 30 working days and publish it on 4 July. Third-party submissions to the report must be concluded by 10 June.
The CMA did not comment on exactly which elements of Wave 3 it had been asked to assess. However, the most recent SHDF includes a number of changes designed to increase flexibility and make delivery easier than previous waves.
One such change is a new optional low-carbon heating incentive for homes on the gas grid.
DESNZ is offering £20,000 per home to install low-carbon heating and other energy efficiency measures in properties that are on the gas grid. This incentive is available for up to 10% of all homes within a bid.
Low-carbon heating measures eligible for this grant include air source heat pumps, ground source heat pumps, shared ground loops and heat networks. Unlike the rest of the scheme, this grant requires no match funding from providers.
There is also a separate cost cap for installing low-carbon heating in homes that are off the gas grid.
Meanwhile, organisations with a proven track record of delivery will be able to apply for funding under a more relaxed strategic partnership route.
Wave 3 is expected to open for applications this summer, and successful applicants will be announced in autumn 2024. The Wave 3 delivery window is expected to last for four years, up to September 2028.
In March, the National Audit Office revealed that just 673 heat pumps were fitted out of nearly 23,000 energy efficiency measures installed using the SHDF over 20 months from 2022 to 2023.
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