Wales faces a significant retrofit challenge, with Welsh Government data showing that only 45.9% of homes assessed between 2015 and 2024 achieved an EPC rating of A-C[1].  At the same time, it has developed a distinctive policy environment that has encouraged innovation, collaboration and long-term investment in home energy upgrades. For many of the SEA's members, this combination of market need and policy ambition is making Wales an increasingly attractive place to develop, test and deploy new solutions.

Keeping homes in the rental market

Within the private rented sector, it is encouraging to see the Welsh Government exploring ways to maintain the supply of rental housing. Initiatives such as Leasing Scheme Wales could become increasingly important as the regulatory landscape evolves and landlords consider their future participation in the sector[2].  By bringing vacant properties back into use and supporting their improvement, the scheme helps maintain housing supply while providing affordable accommodation for those who need it most.

Social housing as a driver of retrofit innovation

Many of the SEA's members see the Welsh social housing market as particularly promising. Social housing continues to receive sustained government attention, including recent funding uplifts for both Nest and the Optimised Retrofit Programme (ORP), reinforcing continued support for improving the energy performance of homes[3].

Alongside this investment, Welsh social landlords are increasingly adopting strategic, whole-home retrofit approaches. Rather than focusing on individual measures in isolation, providers are considering how a range of technologies and interventions can work together to improve building performance, reduce energy demand and deliver better outcomes for residents. This has helped create a collaborative environment in which housing providers, industry and government can work together to identify and evaluate effective retrofit solutions.

A key feature of this approach has been ORP's willingness to support a "test and learn" model of delivery. For many SEA members, particularly those developing newer products and technologies, the programme has created opportunities to demonstrate solutions that may still be progressing through accreditation or product recognition processes and which may otherwise struggle to access mainstream funding routes.

Importantly, this flexibility has not come at the expense of consumer protection. Projects are delivered within a managed environment, with performance monitored, data collected and tenant outcomes assessed. This helps build a stronger evidence base on how technologies perform in real homes while ensuring residents remain protected throughout the process.

This approach also represents a notable point of difference from many retrofit programmes elsewhere in the UK, where funding eligibility has often been more closely tied to established technology and accreditation requirements. While these frameworks serve an important purpose, Wales' willingness to create space for managed experimentation has enabled social landlords and industry partners to explore a wider range of solutions while continuing to monitor performance and protect residents. There may be lessons here for future scheme design, particularly as governments seek to balance innovation, consumer protection and value for money.

We are also seeing the benefits extend across the retrofit ecosystem. Housing providers gain greater flexibility to explore solutions suited to the needs of their housing stock, manufacturers are able to gather real-world performance data and resident feedback, and policymakers benefit from stronger evidence to inform future funding and regulatory decisions. As a result, Wales is increasingly being viewed as an attractive place to trial, refine and scale new approaches to home decarbonisation.

In many respects, Wales is emerging as a real-world testbed for retrofit policy and delivery. As governments across the UK grapple with the challenge of decarbonising existing homes, the lessons generated through Welsh programmes have the potential to inform not only technology choices, but also approaches to consumer protection, delivery models and the effective use of public funding.

With the current programme scheduled to conclude on 31 March 2027, maintaining these strengths should be a priority for any successor programme[4]. As the First Minister has noted, the programme's value lies in its flexibility and its ability to support learning through practical deployment[5].  Retaining this principle will be important as social landlords continue moving towards whole-home retrofit strategies that require a broad range of technologies, delivery models and funding approaches.

Flexibility is also becoming increasingly important in how retrofit programmes are financed. There is growing interest in funding models that could reduce the upfront costs associated with measures such as solar PV and battery storage. With housing providers facing competing demands on limited budgets, these approaches may offer opportunities to attract private investment into retrofit programmes, helping landlords make scarce resources go further while supporting a broader package of building performance improvements.

Interest in these models continues to grow across the sector. Understanding the opportunities they present, alongside any policy or regulatory barriers to wider deployment, will therefore form an important part of the SEA's social housing and low-income work programme over the next 12 months.

Early signals from the new administration

Housing is clearly a top priority for Plaid Cymru, based on the commitments set out in its election manifesto. It was therefore encouraging to see Minister Siân Gwenllian MS's First 100 Days review reference the evaluation of the Welsh Government's flagship social housing retrofit programme[6], which found that, even under conservative assumptions, every £1 invested generated at least £1.90 in benefits. We hope this positive assessment is reflected in future funding decisions and the design of any successor programme.

The First 100 Days review also highlighted the disproportionate impact that the loss of Energy Company Obligation (ECO) funding has had on fuel-poor households in Wales. As a result, Nest, the Welsh Government's flagship fuel poverty scheme, now carries an even greater responsibility for supporting vulnerable households and improving the energy performance of existing homes. Ensuring that available funding is targeted effectively, and reaches as many households as possible, is therefore likely to remain a key challenge in the years ahead.

As the Welsh Government develops its approach to Warm Homes funding, we are encouraged by its interest in exploring lower-cost interventions that could help limited budgets support a greater number of households. Given the scale of fuel poverty challenges across Wales and ongoing pressure on public finances, understanding how funding can deliver the greatest possible impact will be increasingly important.

The Minister's focus on heat pumps reflects both their important role in the transition to low-carbon heating and the wider challenge of decarbonising homes at scale. However, there is also a strong case for maintaining a technology-agnostic approach to demand reduction. While heat pumps will play a central role in decarbonising heat, a broader range of technologies and measures can also help reduce energy consumption, lower household bills and improve comfort. Enabling access to a wider suite of solutions, including lower-cost interventions where appropriate, would help ensure support is tailored to the characteristics of individual homes and the needs of residents, while making more effective use of limited public funding and helping available budgets reach as many households as possible.

Looking ahead: priorities for the years ahead

At the time of writing, the Welsh Government has provided some insight into its priorities for new-build housing and home-grown energy generation[7]. However, greater clarity on the future direction of retrofit policy and funding is likely to emerge only after the Budget.

Against this backdrop, there are a number of areas where greater policy certainty would be welcomed by housing providers, industry and delivery partners alike:

• Timely confirmation of Wales' allocation under the Warm Homes Plan, providing certainty for delivery partners and the wider market.
• Clarity on the future of the Optimised Retrofit Programme, including whether a successor programme will continue beyond the current phase and provide long-term confidence for investors, housing providers and industry.
• Retention of ORP's successful "test and learn" principles, allowing social landlords to continue exploring and evaluating different pathways to decarbonisation within a managed and evidence-led framework.
• Continued investment in building performance monitoring, with a greater focus on collecting and utilising real-world energy consumption and performance data.
• Further detail on the pilot studies announced by the Minister in her First 100 Days publication, including their scope, objectives and intended outcomes.
• Consideration of how Warm Homes funding can reach as many households as possible, including the role that lower-cost measures and alternative technologies could play in supporting fuel-poor households following the closure of ECO.

[1]  Welsh Government. 2025. Analysis of home Energy Performance Certificate (EPC) data: interactive dashboard. Available here   

[2] Welsh Government. No date. Leasing Scheme Wales. Available here

[3] Welsh Government. 2026. £17 million Welsh Government boost for home energy upgrades. Available here

[4] Welsh Government. 2026. Optimised Retrofit Programme. Available here

[5] Welsh Government. 2026. First 100 Days – Warmer and More Efficiency Homes. Available here

[6] Welsh Government. Evaluation of Welsh Housing Quality Standard 2023 and Optimised Retrofit Programme. Available here

[7] Welsh Government. 2026. Programme for Government – Wellbeing Statement. Available here