James Williams, CEO, Sero
The UK is a genuine world leader in decarbonisation, having reduced greenhouse gas emissions faster than any other G7 economy since 1990. But it still lags in one key area: decarbonising its housing stock, with most homes still relying on gas for heating. The ambition is there, and this government has given it fresh momentum. Execution, on the other hand, has proven more difficult.
That challenge is particularly acute in social housing. Councils and housing associations are responsible for millions of homes, many of which need upgrading to modern energy standards. But doing so requires investment they simply do not have. The challenge is made even greater by the fact that many residents who would benefit most from these improvements are unable to contribute towards costs that can exceed £10,000 per home.
Getting this right matters. Done well, retrofit can reduce energy bills, improve health outcomes and create warmer, more liveable homes, ensuring the benefits of the energy transition are shared by everyone.
One model already showing significant promise is Energy-as-a-Service (EaaS). By aligning financial viability for landlords with tangible benefits for residents, it has the potential to unlock social housing retrofit at scale. At its core, EaaS reframes housing portfolios as managed energy assets, combining upgrades, long-term energy management and resident engagement into a single system. Rather than treating retrofit as a one-off capital cost, it turns it into a long-term, investable asset that can generate ongoing value.
EaaS attracts private and institutional capital
Traditional retrofit funding relies on grants or landlord borrowing, both of which have their limits. EaaS takes a different approach by moving financing off the landlord’s balance sheet. Through special purpose vehicles (SPVs) and energy service companies (ESCos), third-party investors such as pension funds and impact investors fund the upfront cost of retrofit. In return, they receive long-term, contracted revenues generated through energy savings, the performance of on-site technologies like PV, batteries and in the future heat pumps and, where available, participation in flexibility markets. Landlords retain oversight of their housing stock and resident relationships without carrying the financial burden of the upgrades.
Crucially, residents don’t have to hope their home wins a postcode lottery of grant eligibility. Landlords and investors fund the upgrade and share the value created through better energy performance, so every home gets the same shot at a warmer, cheaper-to-run future. Retrofit becomes a long-term investment, not a one-off, grant-dependent gamble.
Encouragingly, projects are already demonstrating what this approach can achieve. At the Penderi retrofit project in Swansea, delivered with Wales’ largest housing association, Codi, more than 500 homes were fitted with solar panels and battery storage as part of one of Europe’s most ambitious retrofit programmes.
At Addison House, a later living development delivered with Cardiff Council, green technologies are actively managed to keep residents’ energy and hot water bills low. Importantly, the financial benefits are shared directly with residents. To date, more than £18,500 has been returned through “Green Comfort Credits”, helping offset household energy bills.
These projects demonstrate an important shift in thinking. Traditionally, landlords paid for upgrades while tenants received the financial benefit through lower energy bills. EaaS aligns those incentives. Residents benefit from lower bills and warmer homes, landlords receive a share of the revenues generated, and investors earn stable, long-term returns on their capital. Retrofit becomes financially sustainable rather than grant dependent.
The wider benefits are equally compelling. Warmer, more energy-efficient homes can improve health outcomes, reduce fuel poverty and lessen pressure on the NHS and social care system, strengthening the case for both public and private investment.
Equity & economies of scale
Not every home will be suitable for technologies such as solar PV, but that should not prevent communities from benefiting. By aggregating homes into large, place-based schemes, value can be shared across entire housing portfolios, ensuring properties without generation assets still benefit. At the same time, larger programmes reduce transaction costs, standardise delivery and create investment opportunities at a scale that attracts institutional capital.
Scaling EaaS will require both the right funding mechanisms and the right regulatory framework. Programmes such as the Warm Homes Fund can use public finance to de-risk early projects, establish standard delivery models and attract private investment. Grants can then be targeted towards the homes that are hardest to retrofit, while private capital scales delivery across wider housing portfolios. At the same time, issues including energy licensing, VAT treatment and the classification of EaaS payments within rent regulations need to be clarified. Providing certainty in these areas will give investors further confidence to back projects at scale.
Energy-as-a-Service offers a fundamentally different way of thinking about social housing retrofit. Rather than treating energy retrofit as a cost to be managed, it creates a model that delivers financial returns alongside warmer homes, lower bills and lower emissions. At a time when the UK needs to accelerate the decarbonisation of its housing stock, Energy-as-a-Service could prove to be one of the most effective ways of turning ambition into action.
