NatWest and British Gas join forces to turbocharge efforts to insulate draughty social homes

A consortium including NatWest and British Gas have joined forces to create a new financial model to revolutionise how social homes are retrofitted to slash energy bills, household emissions and hit climate targets.

The banking and energy giants are working with Places for People, Pineapple Sustainable Partnerships, Sero and Tallarna to find a new way to slash the upfront costs of making homes greener for landlords as the UK races to reach net-zero carbon emissions by 2050.

The six-strong consortium will test the new model on 1,000 homes owned by Places for People, looking to quantify the environmental, financial and health benefits for residents. This will then be used to change how retrofit is funded, through selling solar power the homes generate, retrofit credits and government grants.

Marcos Navarro, director and sustainability lead at NatWest Group said the hope is the model will provide a blueprint for others to follow.

He said. “It is fantastic to see this project moving forward by exploring how the implementation of energy efficient measures, alongside financing solutions can help to reduce the financial burden on landlords, as well as improving the quality and comfort of homes and communities.

“We aim to build on the successes with Places for People to extend this approach to benefit other social housing landlords across the UK.”

Around 29 million of the UK’s existing homes need to be retrofitted by 2050, according to the UK Green Building Council. But, so far, progress has been slow.

The consortium is hoping to act as a one-stop shop to unlock funding more quickly and accelerate retrofitting. 

That will see Pineapple Sustainable Partnerships work to streamline the supply chain and develop the financial model while NatWest will provide financial backing and develop funding solutions.

British Gas, which has been under fire after profits skyrocketed to £750m in 2023 as energy bills rose, will be tasked with delivering energy efficiency upgrades while retrofit experts Sero will offer knowledge and practical tools in retrofit technology, measurement and billing.

Climate tech firm Tallarna will use software, integrated insurance, and legal structuring to create financeable business cases with Places for People acting as the lead social housing landlord during the initial project phase.

Dan Rosenfield, managing director of net zero at British Gas, said:“As part of our ambition to energise a greener fairer future, we are committed to helping households to decarbonise in a way that is simple and affordable. We are pleased to be part of this collaboration which is set to implement best practices, learnings, and technology.

“By doing this, we will help tackle decarbonisation at scale in the social housing sector and help social housing residents save money.”

The consortium are not the only ones trying to innovate to fund retrofit works in social homes.

The Housing Associations’ Charitable Trust was named a Big Issue Changemaker in 2024 over its project to use carbon credits to make social homes greener and fund more works.

How do households contribute to climate change?

Residential households account for about 17% of the UK’s carbon footprint with heating and cooking the main reasons for emissions.

That’s why 29 million homes need retrofitting by 2050 with at least 15 million completed by the end of the decade.

But progress is not on track.

The UK’s slow progress on home insulation is costing bill payers an eye-watering £3.2 billion per year, the Energy and Climate Intelligence Unit recently warned.

In January, the New Economics Foundation warned just 16% of the insulation measures needed by the end of 2023 to stay on track to reach net zero had been delivered.

The think tank tracked the progress of four Westminster-backed schemes: the home upgrade grant, the local authority delivery schemes, Eco and the social housing decarbonisation fund (SHDF). 

The latter fund focuses on social housing where landlords, not tenants, are required to upgrade their own stock. The SHDF has seen almost £1bn paid to local authorities to install 40,700 measures in 21,000 households as of May 2024, according to government figures.

Meanwhile, private landlords are required to retrofit their homes to energy performance certificate rating C by 2030 after the previous government U-turned on plans to force all newly rented properties in England and Wales to hit that mark by next year.

Owner-occupiers who will have to foot the bill for their own retrofit upgrades

Labour has promised to invest an extra £6.6bn over the next Parliament to upgrade five million homes under its Warm Homes Plan.

Keir Starmer’s party promised to offer grants and low-interest loans for insulation, solar panels, batteries and low carbon heating to slash energy bills. 

The government will also work with the private sector, including banks and building societies, to unlock private finance to accelerate home upgrade, according to the Labour manifesto.

Miatta Fahnbulleh, parliamentary under-secretary of state at the Department for Energy Security and Net Zero, said: “To reach our clean power by 2030 target, we are going further and faster in upgrading homes across the UK as part of our Warm Homes Plan. I welcome the move from British Gas and its partners to rollout low-carbon heating to more social homes, helping to cut emissions and strengthen our energy independence.”

Analysis from Heriot-Watt University associate professor Ran Boydell in The Conversation found Labour would be right on track if it managed to retrofit five million homes but it may need significantly more cash.

Labour’s £6.6bn amounts to £1,320 per household when shared among five million homes, according to Boydell. Renovating a typical family home to net-zero standard could cost up to £26,000, according to the Climate Change Committee’s 2021 assessment. That would put the cost of upgrading five million homes at £130bn.

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