Notice

Green Home Finance Accelerator pilot phase: clarification questions with responses (added 5 September 2023)

Updated 12 March 2024

We have published responses to stakeholder questions which in our judgement were of material significance to the Green Home Finance Accelerator – Pilot Phase competition. All questions were submitted to uk_ghfa@pwc.com after publication of the Competition Guidance Notes, or raised during the information event held on 23 August 2023.

The Green Home Finance Accelerator – Pilot Phase GOV.UK page provides further programme details.

Section 1: Competition scope and eligibility

1. Can only lead applicants (from Discovery Phase projects) apply for the Pilot Phase funding, or can consortium members (non-lead) apply for projects in the Pilot Phase on their own?

The Pilot Phase competition is open to proposals that include at least one applicant that was awarded a Discovery Phase grant.

The eligibility criteria were defined in this manner as the Department recognised that the structure and makeup of consortiums had potential to vary between Discovery and Pilot Phases. Any variation in project partners between phases must be clearly justified within Pilot Phase funding applications.

It should however be noted that applications for Pilot Phase funding are expected to clearly build on activities undertaken during the Discovery Phase. Applicants are required to provide evidence from Discovery Phase activities in response to the Pilot Phase assessment criteria.

2. If an organisation submitted one Discovery Phase funding application, can they submit multiple Pilot Phase applications?

Yes, organisations who only submitted one application for the Discovery Phase are permitted to submit multiple Pilot Phase applications.

However, as Pilot Phase projects are expected to clearly build on activities undertaken during the Discovery Phase, applicants should clearly demonstrate and justify why it is necessary to submit more than one funding application under these circumstances.

Applicants participating in multiple projects should also note that organisations may participate (as either a project lead and/or consortium member) in a maximum of up to three applications / proposals only.

Organisations must not apply for funding for the same piece of work more than once and organisations must not apply for funding for work that is already being funded via other public sources.

Where multiple applications are being submitted, each application must be stand-alone, and they should not depend on each other to succeed. All applications shall be assessed and awarded funding independently of one another.

3. Is there an eligibility requirement for all Discovery Phase milestones and invoices to be submitted before the Pilot Phase application deadline?

No, Discovery Phase milestones and invoices can still be submitted after the Pilot Phase application deadline at 12:00 (noon) on 03 October 2023

4. Is there an aggregate grant funding cap for organisations that are participating in multiple applications?

There is no grant funding cap for organisations participating in multiple (that is up to 3) applications.

The total requested grant for each Pilot Phase project must however be a minimum of £200,000 and must not exceed £2,000,000.

5. Do you have to have a finance partner in place to apply?

We would expect all projects to have established the necessary relationships with finance partners during the Discovery Phase.

However, should the necessary relationships not be in place, Pilot Phase applicants must clearly identify and outline what steps they will undertake to ensure that these relationships can be established within reasonable time scales during the Pilot Phase to enable piloting of their product.

6. Can a project include multiple financial partners?

Yes, however, as with any project partners, subcontractors, and/or stakeholders, it is important to clearly define the role of each organisation. Applicants should also have a clear project management approach towards how they will manage all stakeholders to enable effective delivery of their project.

7. In eligibility criteria point 4 ‘Project Team Composition’ it states that ‘…all Pilot Phase applications must demonstrate that the necessary finance provider relationships are in place to enable a pilot of a green finance product(s) or service(s).’ Would, for example, a letter of intent be sufficient demonstration of a relationship being in place?

Yes, a letter of intent would be considered sufficient demonstration that the necessary finance relationships are in place.

8. Can a Pilot Phase application include both Industrial Research and Experimental Development, or is it expected by default that Pilot Phase activities will be Experimental Development?

We would expect Pilot Phase activities to be predominantly experimental development, however, there may be for example some industrial research type activities that would need to be undertaken to enable the pilot to commence.

Applicants should note that Finance Form submissions must separate innovation activities out for each individual consortium member (as applicable) and apply the correct grant funding intensity levels as set out in the Pilot Phase – Competition Guidance Notes.

9. Can grant funding be used for hardware for products? Will funding be available in advance or in arrears?

The Department will not make payments in advance of need and grant payments will be in arrears on satisfactory completion of agreed milestones and deliverables following receipt of a correctly submitted and itemised invoice.

Eligible costs include costs of the capital purchase of instruments and equipment to the extent and for the period used for the project. Any remaining value at the end of the project must be recorded for each capital item. Where such instruments and equipment are not used for their full life for the project, only the depreciation costs corresponding to the life of the project, as calculated based on generally accepted accounting principles are considered as eligible.

Applicants should note that the grant award may not be used for the green finance product itself (a green finance product being, any type of loan instrument made available to exclusively finance or re-finance, in whole or in part, new and/or existing, eligible green home upgrades). This means the grant must not fund loans, offset interest rates/cashback rewards etc., this should be funded by the lender offering the product.

10. Would the cost of installing equipment in a customer’s home be considered an eligible cost?

The grant award may not be used to fund the green finance product itself and the cost of installing home retrofit measures are not considered an eligible cost.

11. Can you provide guidance on acceptable team salary/ day rate levels?

There are no quantified levels, any day rate should be fully justified and be broken down between salary and overhead.

12. When bringing our product to market for piloting purposes we would expect to design a suite of marketing and engagement campaigns which would include any associated collateral / materials (letters, leaflets, social media content etc) to recruit customers. Are these considered eligible costs?

Yes, marketing and engagement for the purposes of product piloting are considered eligible costs. These costs should be clearly identified, proportionate and justified.

Any grant funded marketing and engagement activities should relate directly to the piloted product only and they should not be for the purpose of benefitting other projects or the organisation/s more broadly.

13. Within the eligible costs is customer acquisition an eligible cost, that is, advertising / recruitment of consumers for the piloted product?

Yes, customer acquisition is considered an eligible cost but will require appropriate justification of the activities and the amount of grant funding that will be used. Any activity will need to relate directly to the piloted product and not for the purpose of benefitting other projects or the organisation/s more broadly.

14. Is it a requirement that the product has not been made available for sale before the Pilot Phase project start date?

The status of the product should be assessed against the eligibility criteria. The relevant criteria states that the project must not be at market entry at the start of the Pilot Phase.

Market entry stage in the context of the Pilot Phase applies to any products that have already progressed to commercial readiness level 4a (that is, first customer shipment of planned repeat product or service; repeated sales) and above.

15. Would a project that is not at market entry at the point of application but moves to this level after grant award be considered eligible?

Eligible projects should not have reached market entry (commercial readiness level - 4a) at the time of grant award. However, as projects progress through the Pilot Phase, we would expect that they should be moving towards commercial readiness level - 4a and above.

16. Would offering a test version of our product to a small number of ‘friendly’ customers in advance of the Pilot Phase make our application ineligible?

Based on the limited information provided, we cannot provide a definitive decision on whether these plans would make a potential Pilot Phase funding application ineligible. It is the responsibility of applicants to clearly demonstrate that their project meets the eligibility criteria in relation to the commercial readiness of their product.

We would however expect any eligible product testing in advance of the Pilot Phase to generally involve planning/testing of new processes, testing hardware, etc., at low volumes. This type of testing could potentially be viewed as necessary to develop the final product/service before progressing to the commercial readiness level 4a ‘Market Entry’ stage of offering a planned repeat product or service.

It should be noted that the intention to test any products in parallel with a potential Pilot Phase grant funding application (and/or outside of the grant funded activities) may also have relevance to several Assessment Criteria.

For example, if product testing is proceeding outside the scope of a Pilot Phase project, an applicant would be expected to clearly justify why public funding is still needed to take this innovation forward (that is, Criterion 4b - Additionality).

Further relevant assessment criteria may include deliverability (Criterion 3a - Project work plan) and how the product testing relates to the product pilot, alongside any product testing risks (Criterion 3c - Project success factors, target outcomes, and risks) which are relevant to the potential Pilot Phase project.

17. We are planning to undertake some PR discussing our products in advance of the Pilot Phase – could these activities impact our ‘commercial readiness’ as defined within the Pilot Phase – Competition Guidance Notes?

We would expect the content of any PR activities to be consistent with the commercial readiness of the product.

For example, publicising research and development of new potential products would appear consistent with a pre-market entry solution. In contrast, publicising products that are currently available to homeowners may contradict the commercial readiness level of the product being ‘pre-market entry’.

18. Will an application be considered where the green finance product already exists and the grant funding is used to pilot the distribution (for example customer engagement and advice) element?

We would recommend in this case before applying that the applicant ensures that they have given due consideration to the competition eligibility criteria (particularly those concerning the project status and additionality) as set out is section 3 of the Pilot Phase – Competition Guidance Notes.

We would expect an applicant under these circumstances may be requested to provide further evidence to demonstrate that their project meets eligibility criteria.

19. Given that research shows that many people would rather save to finance green home improvements rather than borrow, would a proposal be considered where the green financial product is a savings product rather than a loan?

When assessing various potential products and services against the eligibility criteria applicants are advised to consider whether their proposal is in scope (such as piloting of innovative financing offers which incentivise domestic energy efficiency, low carbon heating, and micro-generation retrofit for owner occupiers and private landlords of existing homes).

Section 2: Funding levels and subsidy requirements

20. What is the maximum percentage of public subsidy a research organisation can claim?

Research organisations are eligible to apply for funding. Please see section 7.3 of the Competition Guidance Notes for details of how a research organisation is defined within the context of this programme.

Research organisations undertaking non-economic activity can be funded as follows:

• Up to 80% of full economic costs (using the Full Economic Cost approach) if you are a higher education institution such as a university.
• Up to 100% of eligible costs for all other research organisations.

Research organisations which are engaged in economic activity as part of their project will be treated as business enterprises for the purposes of funding - and the funding levels set out in Table 3 of the Competition Guidance Notes will apply.

When referring to economic and non-economic activity within the context of this competition, the Department uses the definition from the Framework for State aid for research and development and innovation

21. What are recoverable costs for non-profit research and technology organisations (RTOs) and Catapults? Are there any restrictions to the costs they can recover?

Non-profit research and technology organisations (RTOs) and Catapults are treated as research organisations (see Question 20) within this competition.

Eligible cost requirements apply to all organisation types receiving grant funding.

The Department will only provide grant funding to cover eligible project costs which includes the applicant’s own costs, eligible costs incurred by consortium members and eligible costs incurred by organisations connected to any of these incurred in delivery of the agreed Pilot Phase project.

22. Can public authority funds be used to support matched funding where sales of the service to public authorities are part of an evidenced business model?

Match funding cannot come from funding which is attributable to the department, other government departments, UK public bodies, other governments or government organisations.

23. Is the amount of match funding required based on the lead partner status or all partners in the consortium?

No, the level of public funding that can be provided to each individual consortium member will vary depending on the type of innovation activity and size of each organisation.

Please refer to section 7.3 of the Pilot Phase - Competition Guidance Notes where Table 3 sets out the maximum level of public funding that can be provided as a percentage of an organisation’s eligible project costs.

Applicants must clearly identify within the ‘Subsidy Control’ section of their Finance Form how much grant funding is being claimed and what level match funding is being provided by each individual consortium partner.

Details of the amount and origin of match funding for each consortium member should also be provided in response to the Project Finance assessment criterion.

24. How will the lack of capital for match funding when applying affect the score of the application?

Applicants are not required to have match funding in place when submitting their Pilot Phase applications.

However, the Pilot Phase eligibility criteria require all grant recipients to provide evidence that their required match funding has been secured within 3 months of the commencement date of their grant funded activities.

The Project Finance assessment criterion also requires applicants to outline details of the origin of their match funding requirements.

25. Can projects request additional grant funding throughout the Pilot Phase to deal with potential cost increases?

Each grant recipient will be offered a maximum amount of grant funding at the point of grant award. This is the total amount of grant that the Department may pay and this amount will not be increased as a result of any overspend or otherwise.

Section 3: Programme timetable

26. What is the Discovery Phase end date? Is that date subject to change?

The Discovery Phase end date is 03 October 2023.

As this coincides with the deadline for submission of Pilot Phase grant funding applications, all projects will be offered the option of extending the deadline for completion of the end of Discovery Phase report to 31 October 2023.

Projects which intend to accept this extension will be issued a grant addendum to formalise agreement of the deadline amendment between grant recipients and the Department.

This extension is applicable to the end of Discovery Phase report only, and it does not apply to any other grant funded activities, which are due to complete by 03 October 2023.

27. Would extending the Discovery Phase report deadline beyond 03 October 2023 have any negative impacts on a Pilot Phase grant funding application?

The end of Discovery Phase report will not be taken into consideration during the Pilot Phase assessment and moderation process.

The purpose of the end of Discovery Phase report is to objectively document the learnings and outcomes of the work undertaken during Discovery Phase. The report should therefore not be used to promote any potential Pilot Phase work.

The report will be expected to be written in a manner that allows it to stand independently of the outcome of any Pilot Phase grant funding application.

28. Can workstreams that started in the Discovery Phase continue into the Pilot Phase?

We would potentially expect to see some Discovery Phase work continuing into the Pilot Phase. However, these types of activities are expected to be limited to those that are necessary to enable commencement of a product pilot.

The Deliverability assessment criterion will consider whether the project approach has been appropriately justified. We would not consider ongoing research and development of green finance products that are not going to be piloted to be a justifiable Pilot Phase activity.

It should also be noted that applicants should ensure that there is a clear separation between Discovery and Pilot Phase activities as grant awards are subject to the competition outcome.

29. Is there any risk that the target 15 December 2023 grant funding agreements signing date may be delayed?

Our aim is complete grant awards for all projects in line with the programme timetable as set out in Pilot Phase – Competition Guidance Notes.

Completion of due diligence and grant recipients returning signed grant agreements represent the highest risks in terms of potential programme delays.

It is therefore essential that applicants submit complete and accurate information within their grant funding applications. Any responses to due diligence clarifications should be sufficiently detailed and returned with the requested timeframes.

We would also advise that grant recipients ensure grant terms and conditions, which are available now alongside the Competition Guidance Notes, have been reviewed in a timely manner and that the necessary individuals are available to promptly sign and return grant agreements.

30. Is it possible to delay the 18 December 2023 start and 28 February 2025 Pilot Phase end dates by approximately three weeks?

Once grant agreements have been signed, projects can decide the specific date (within one month of grant award) upon which they wish to commence delivery of grant funded activities. However, the project end date cannot be amended. All grant funded activities must therefore be completed by 28 February 2025.

31. Can you confirm whether there will be any embargo on announcing the competition outcome which may delay the commencement of certain Pilot Phase grant funded activities?

We would look to announce the Pilot Phase competition outcome at the earliest available date.

The date of this announcement cannot be confirmed until all successful applicants have completed due diligence and signed grant agreements with the Department.

Projects should anticipate there being a gap between the communication of the competition outcome to projects, and the public announcement of the competition outcome. Please notify the Department of any potential delays that this may cause to grant funded activities at the earliest opportunity.

32. Can projects be completed before the 28 February 2025 Pilot Phase end date?

Yes – 28 February 2025 is the latest date by which all Pilot Phase grant funded activities must be completed. Projects can finish at an earlier date if their funded activities are deliverable within a shorter timeframe.

33. Can our project continue beyond the Pilot Phase end date? For example, can we have a project plan that delivers a final report in February 2025, but continues to deliver non-grant funded activities beyond that date?

All grant funded activities must be completed by 28 February 2025.

Individual projects are responsible for deciding post-pilot next steps for the green finance product or service. It should however be noted, unless otherwise stated, that applications will be assessed on the basis of the grant funded activities they expect to undertake during the Pilot Phase.

Section 4: Product piloting

34. Are projects expected to perform more research during the Pilot? Or is the focus on launching the product and getting evidence from its launch?

The focus of the Pilot Phase should be piloting products and gathering evidence.

We would not consider ongoing initial research and development of green finance products to be a justifiable Pilot Phase activity. It is however expected that further research activities may be necessary in some cases to enable commencement of a product pilot.

35. Are you able to give an indicator of the approximate scale of product pilot you are expecting to see? How will pilot targets be assessed?

The Discovery Phase has supported several projects which may have a relatively narrow geographic reach, or may only appeal to a niche consumer group, at least initially. Due to the diversity of projects participating in the programme, the Department has therefore not provided specific guidance on product pilot target numbers.

The Department does however expect all pilot targets to be specific, well-defined and without ambiguity. Applicants should ensure targets can be tracked and measured.

Applicants should propose realistic targets which are stretching but achievable over the duration of the pilot. We would also expect applicants to justify why proposed targets are appropriate and how they are relevant to the development of their product and/or service.

Applicants should also clearly identify the expected duration of their pilot and the specific deadline for reaching their targets.

36. Does the Project Finance assessment criterion take into consideration a value for money assessment of project costs compared to pilot participants?

The Project Finance assessment criterion does not directly assess the forecast number of pilot participants. This criterion takes into consideration the total anticipated project costs, how these have been justified and the steps that have been taken to minimise costs to ensure that they are proportionate and represent value for money.

The Deliverability assessment criterion does however require applicants to outline key targets for measuring Pilot Phase outcomes, how they will be achieved, how they will be measured, and why they are appropriate.

Target outcomes should include an estimate of the number of homeowners expected to take-up the product/service over the duration of the pilot, with evidence to support justification of this estimate.

37. How will grant recipient be held to account against product pilot targets?

Grant recipients will be required to report progress against Pilot Phase targets during monthly and quarterly project reporting activities.

38. When does the Department expect product rollout to start during the pilot? Should projects leave time in the project to learn from the product ‘in-life’ in the field, or is the focus expected to be just on the development and product launch / initial rollout?

The Department has not set fixed timelines for duration of the actual product pilot due to the diverse nature of the projects funded in the Discovery Phase. However, we would expect projects to maximise the time available for piloting products and to set realistic targets that are stretching but achievable over the duration of the pilot.

In terms of learning and dissemination, all projects will be required to prepare a publishable End of Pilot Phase project report plus an interim report at the time of product pilot launch. We would therefore expect all projects to take this requirement into consideration when planning their piloting activities.

Section 5: Miscellaneous

39. Is there any advantage to applying as a consortium rather than sole applicant?

There is no advantage to either.

All eligible proposals will be assessed against the assessment criteria set out in Pilot Phase – Competition Guidance Notes. Applicants are responsible for deciding whether a sole or consortium application enables them to address the assessment criteria with a strong evidence base.

40. Can commercial agreements exist between consortium members – such that one member receives funding and uses that funding to pay another member?

Grant Offer Letters for successful applicants will be made out to the delegated lead organisation and as such the Department is only responsible for making claim payments to the delegated project lead. Payments to collaboration partners or sub-contracts are the responsibility of the lead organisation.

Additionally, the Department requires that all partners in a collaborative application have signed a Collaboration Agreement (CA) within one month of the commencement date of grant funded activities.

41. How will grant funding be allocated if the value of high-quality applications received exceeds the total grant funding available?

Eligible applications which pass the minimum threshold (that is, the total weighted score of 60% or above and a score of at least 3 or above against each of the assessment criteria) will be placed in a ranked list with the highest scoring project first.

The funding will be allocated starting with the highest scoring project.

Remaining funding will be allocated to the next highest ranked projects in order, until the funding has been allocated or until no more projects meet the minimum funding criteria.

42. Are, all things being equal, applications requesting lower funding amounts more likely to be successful than those that request more?

No, the Department will allocate funding in order of merit from highest score. Please see section 8.2 of the Pilot Phase – Competition Guidance Notes for further information on funding allocation.

43. Does the Pilot Phase application form include questions directly relating to the Discovery Phase?

The Pilot Phase assessment criteria do not include specific questions on Discovery Phase activities.

However, Pilot Phase assessment criteria responses should include evidence to support design choices and assumptions either from referenced, credible external sources or from internal sources that were held before the Discovery Phase or from Discovery Phase activities.

44. The Pilot Phase – Competition Guidance Notes mention “a series of local demonstrator projects which will test various approaches to delivering in-person advice, with a particular focus on harder-to-treat properties and harder-to-reach consumer groups.” Are Pilot Phase project obligated to contribute towards these demonstrator projects, and what is their relation to the Green Home Finance Accelerator?

Details of existing and planned government energy efficiency advice services were provided within the Competition Guidance Notes so that applicants could take these into consideration when planning their approach toward the provision of retrofit enabling advice.

If you believe that there is potential for collaboration with a local demonstrator in your area then we would encourage you to reach out and build a partnership, but there is no obligation to do so.

45. We note the government will expand the functionality of its advice service to include digital eligibility checkers for government support schemes such as Phase 2 of the Home Upgrade Grant (HUG) and Great British Insulation Scheme (GBIS). Will this include live online income and council tax checks, and, if so, will these checks be available via API for other advice services?

At present the services do not support live online income or council tax checks. The information inputted into the services will be self-declared data. There will be some checks going on in the background, but Energy Suppliers and Local Authorities will still need to do their own checks to confirm eligibility. We are looking to build on this checking system in future iterations of the services.

46. The Competition Guidance Notes state that Pilot Phase projects will be required to include in their data sharing agreements and privacy notices with stakeholders the explicit reference that, personal data about the stakeholder, such as names, address and email address, will be shared with the Department and the external evaluation contractor. Has the Department taken into consideration what impact this could have on customer engagement, and is there a reason consent is not requested?

The Department intends to commission an independent evaluation of the programme and the projects, a key part of which will be understanding the consumer experience of engaging with the product(s) developed and piloted by the project, and any impact this has on consumers.

Sharing stakeholder contact details with the Department will enable consumers to be recruited for this research, but the Department recognises that this information can only be shared with the informed consent of the consumer and must not be a condition of a consumer being accepted onto the pilot.

As part of their recruitment of consumers, projects will be expected to provide consumers with the option to opt-in to having their contact details shared with the Department and the external evaluation contractor. The Department can provide additional guidance, templates and text should projects require this.