Up to £1.5bn is being made available through the Social Housing Decarbonisation Fund and Home Upgrade Grant schemes.

Social housing providers and local authorities can now submit bids for funding to upgrade the properties of an estimated 130,000 low-income and social households.

The cash will be allocated to fund energy efficiency measures such as external wall and loft insulation, energy efficient doors and windows, heat pumps and solar panels.

The first upgrades from the cash release could begin early next year and run until March 2025, building on more than 30,000 homes already being upgraded under the Social Housing Decarbonisation Fund and Home Upgrade Grant schemes.

Social housing with an Energy Performance Certificate (EPC) rating of D or lower will be eligible for SHDF while the HUG funding will help people who are most vulnerable to fuel poverty, living in privately-owned – both rented and owner-occupied – off gas-grid homes and on low incomes.

The HUG funding will see up to £700m available for local authorities to install energy efficiency measures in around 30,000 properties.

Up to £800m SHDF wave 2 grant funding will see around 100,000 social homes receiving energy efficiency upgrades, with estimated average energy bill reductions of around £400 a year at current prices.

Grant funding under the SHDF scheme will have to be matched by organisations taking the total spend to around £1.6bn.

The wave 2 funding builds on the £179m SHDF wave 1 round last February, which is upgrading up to 20,000 social homes.

Kate Henderson, chief executive of the National Housing Federation, said: “The launch of the second wave of the Social Housing Decarbonisation Fund is hugely welcome.

“This vital funding will enable housing associations across the country to make significant progress in retrofitting and decarbonising their homes – work that not only cuts carbon emissions but saves residents money on their heating bills.

We know that England’s homes produce more carbon each year than the average annual use of the country’s cars, so decarbonising social homes has a pivotal role to play to meeting the country’s net zero target.”