Optimised Retrofit Programme 3 (Year 5): guidance 2026 to 2027

The following guidance is produced to assist applicants submitting bids for funding under the Optimised Retrofit Programme (ORP). It has been developed to help inform the applicants about the types of retrofitting that contribute to the Welsh Housing Quality Standard that the programme aims to financially support.

ORP 3 is for the period of 2022-2027. The main theme of the programme is affordable warmth and decarbonisation achieved through the best path for each individual home. 

Registered Social Landlords and Local Authorities have previously received a funding award allocation from Welsh Government to deliver phased activity of the Optimised Retrofit Programme in 2022-2026. For this year’s funding round (2026-2027) to be considered for awarding, Optimised Retrofit Programme officials will require submission of an application (proforma) that outlines the intended costs for the year 2026-2027, also known as ORP3 Year 5 (ORP3.5). Please note that the funding allocation will continue to be generated on a formula approach of stock numbers that is based on figures sourced from the 2020 data census. The funding should be targeted to those properties that have full Target Energy Pathways (TEPs) in place.

Recipient organisations will be required to complete the proforma and to conform to the outlined format of the proforma. Submitted proformas will be considered by Welsh Government and any areas of clarification will be raised with the recipient organisation. When the Welsh Government are content the proforma is completed and meets the requirements set out below, a grant offer letter outlining funding and grant terms and conditions will be sent to the recipient organisation.

Successful projects will be monitored and evaluated, with recipient organisations required to adopt an open book approach as a condition of accepting the funding. For example, requests for prime documents such as evidence of defrayment, updated actual to forecast models, and project outputs will be requested by Welsh Government throughout the length of the programme.

In 2019, The Better Homes, Better Wales, Better World report was commissioned by Welsh Ministers to examine how homes in Wales could be decarbonised. The recommendations were accepted by Ministers including a commitment to pursue a residential decarbonisation programme. 

In response to the recommendations, it was agreed that an ‘Optimised Retrofitting’ approach would be adopted here in Wales. 

From this commitment and approach the Optimised Retrofit Programme (ORP) was established in 2020. In April 2024 the new WHQS was launched which cemented the requirements for social landlords to reach challenging decarbonisation targets. Over the past five years a range of projects across the social housing sector have been supported. The ORP 3 Year 5 phase of funding seeks to continue to build on this to ensure that all social landlords in Wales engage with ORP to work towards the targets set out in WHQS.

In taking forward the decarbonisation of existing homes, we acknowledge that retrofitting existing homes is a complex and iterative process. Homes are likely to need to go through several stages of retrofit work to reduce their carbon incrementally, embracing innovation and experimentation over time. This is reflected in the requirement to produce TEPs for all their homes. 

It has always been our intent that ORP and WHQS takes a staged approach, using the social housing sector, and investment in it, to lead and inform retrofit for other tenures of homes. ORP is intended to act as proof of concept for approaches to both fabric and technology retrofit and establish a firm evidence base on which to develop Wales’ longer term retrofit approach.

Our focus for ORP 3 will continue to be optimising the thermal and energy efficiency of Welsh social homes. In deploying the programme, we ask landlords to optimise insulation, maximise air tightness, and carefully consider ventilation to reduce heat loss and make homes ‘fabric ready’. We ask landlords to consider balancing the cost of making homes ‘fabric ready’ against the provision of technological measures to make homes cheaper to run and reduce carbon emission. 

Key objectives of the programme are:

• Deliver the Programme in ways that align the design, procurement and delivery of affordable housing with the seven goals of the Well-being of Future Generations (Wales) Act (WFGA) – Well-being of Future Generations (Wales) Act 2015 – The Future Generations Commissioner for Wales.
   
• Encourage landlords to develop a strategic approach which aligns with the targets and guidance set out in Part 3 of Welsh Housing Quality Standard when considering measures to improve affordable warmth and decarbonisation of homes[1].
   
• Demonstrate benefits associated with new (when appropriate) and scalable ways of retrofitting and the associated supply chain of products and services. This also includes engaging and investigating the financial and insurance services sector with a view to encouraging wider uptake.
   
• Harness opportunities to develop jobs, skills training, and develop local industry, embracing foundation economy principles and supporting wider regeneration. The programme is expected to be a source of job creation in the supply chain for retrofitting, by employing local trades and boosting the demand for these skills in Wales.
   
• Contribute to Welsh Government policy objectives around reduction in waste and circular economy.
   
• To support the development of appropriate approaches to decarbonising the private rented and owner occupier sectors and disseminate key findings to maximise learning.

Additional resources

Further details regarding ORP and contextual information on wider developments can be found on the Welsh Government website or via the following links:

Welsh Government Programmes

Optimised RetroFit Programme | GOV.WALES

Welsh Housing Quality Standard | GOV.WALES

Climate change | GOV.WALES 

Careers

Medr - the Commission for Tertiary Education and Research

Working Wales | Working Wales Career and Funding Support

Personal Learning Accounts 

Apprenticeships

Careers Wales and Business Engagement with Schools “Succession Planning”

Construction Industry in Wales

Business Support

Supporting businesses in Wales | Business Wales 

Tendering Support | Business Wales

MCS (Microgeneration Certification Scheme) is the UK’s quality mark for small-scale renewable energy systems like solar panels, solar heating, heat pumps, biomass, and battery storage

TrustMark - the only UK Government-Endorsed Quality Scheme for work carried out in and around the home

TrustMark Scheme Providers - TrustMark work closely with their Scheme Providers, and their Registered Businesses (this forms part of PAS and Lodgement), to ensure that the correct processes and procedures within the TrustMark scheme have been followed.

Wales Built Environment Dashboard

Case Studies and Media Announcements

To be sent to OptimisedRetroFitProgramme@gov.wales in PDF format

The following key dates for ORP 3 Year 5 2026-27 should be noted:

1. Report to Welsh Government

1. At end of project year report on number of premises receiving retrofit measures, type and details of intervention by updating the ‘Property Details Review Sheet’.
    
2. At end of project year report on progress via the ‘ORP 3 Year 5’ Grant Output Form
    
3. At the mid-year (end of Q2 – 30th Sept 2026) and end-of-year (Q4 – 5th March 2027) report on progress towards Requirement 4 (below).
    
4. At completion of the project landlords are required to produce a case study for each project. 
    
5. New: IF requested by Welsh Government, provide a case study on particular scheme.

2. Undertake retrofit measures to homes using PAS 2035 (PAS 2035:2023 Specification for the energy retrofit of domestic buildings).[2]

1. Landlords are required to lodge works on TrustMark Data Warehouse. Please note there is an ORP and landlord drop down lodgement menu on TrustMark Data Warehouse)
    
2. Landlords are required to secure MCS Certificates and associated works lodged on TrustMark Data Warehouse - MCS Certificate Queries - MCS
    
3. Landlords are required to ensure that their supply chain workforce is accredited to PAS2030 or utilise an umbrella approach for smaller sub-contractors.[3] 

3. On schemes specifically identified (i.e. of interest) by Welsh Government, landlords are required to install Environmental and Energy Monitors to homes to inform future retrofit programmes (such as ORP 3 Year 5) and to create pre-retrofit data to support choice of measures for homes. 

Note: Landlords may install Environmental and Energy Monitors in all properties, if they decide to do so. It remains an eligible cost in ORP.

1. Landlords are required to install Environmental and Energy Monitors compliant with, ‘Optimised Retrofit Programme 3 Monitoring Specification’ V.2. However, when there are practical reasons not to install sensors, please outline the reasoning below (for example if Scheme 1 is all same archetype, therefore proposal to install in 50%).
    
2. Landlords are required to contract their chosen sensor supplier to share the data gathered with WG’s Dataset Managers, for incorporation into the ORP Dataset and Dashboards.

4. Landlords are required to align with the elements 3(a), (b), (c) and (d) as set out in Part 3 of Welsh Housing Quality Standard and guidance contained in Appendix 3.

1. All properties submitted in ORP3.5 are required to have a ‘full’ Target Energy Pathways
    
2. As part of WHQS 2023 standard all social landlords are required to undertake a Whole Stock Assessment (link) to review their stock condition and energy efficiency data, software and data analytical skills and produce a Data Quality Improvement Plan.
    
3. As part of WHQS 2023 all social landlords are required to produce 75% of their full TEPs for their whole stock by 1^st September 2026, and 100% of their full TEPs for all their homes in their stock by 31 March 2027, these will be informed by their Whole Stock Assessment.
    
4. Social landlords are required to submit an annual Compliance Monitoring Report as outlined in the Immediate Changes document to WHQS published in October 2025. 

5. To report information to Welsh Government on their skills and supply chains

1. Social landlords are required to provide details of their product and services suppliers
    
2. Social landlords are required to supply details of training and qualification of their staff and suppliers in planning and delivery of works

6. To report to Welsh Government on additional funding streams that are applied for retrofit activities, such as:

• Welsh Govt Business finance and grants | Business Wales
• Welsh Govt Innovation Funding Develop innovative ideas for organisations, products or services | Business Wales 
• Welsh Govt Transitional Accommodation Capital Funding Programme TACP
• UK Govt Boiler Upgrade Scheme
• Welsh Government Social Housing Grant Scheme
• Welsh Govt Empty Homes Grant
• Funding - Wales - Regions - Housing LIN
• UK Govt Heat network efficiency scheme 

1. Payments will be made in arrears based on activity completed as part of your programme. This will be based on a payment cycle throughout the 2026/2027 financial year, with a requirement that all works are completed no later than 31/03/2027. This includes ongoing works undertaken as part of historic iterations of the programme. Any works outstanding after this point are not eligible for grant funding.
    
2. Welsh Government reserve the right to amend scheme acceptability dates and requirements. These will be discussed directly with successful scheme applicants at an appropriate time.
    
3. Funding is to support social landlords to fund energy efficiency works.
    
4. Eligible capital costs are costs that can be directly linked to the programme, such as works associated with retrofit measures installed in homes.
    
5. Up to 10% of the total grant allocated funding threshold can be used for the following non-capital costs:

• innovation and research linked to the decarbonisation of your housing stock.
• In house programme management fees 
• Third party management fees (considered on a case-by-case basis) 
• Procurement of in-house asset management and stock modelling software.
• Data management improvement measures, including data quality assessments.

6. Please note that there is a requirement to split your own contribution by category on the eligible cost sheet.
    
7. Environmental & Energy monitoring systems and Retrofit Assessment fees are eligible costs.
    
8. VAT (Value Added Tax) applied on expenditure incurred will only be considered as eligible expenditure if you are unable to recover the VAT within your own taxation rules.
    
9. Note – There is a requirement for you to make a contribution which also must include an element of pure budget. 

Welsh Government intends to build an evidence base of what works and what doesn’t, to inform future policy and investment decisions. 

Evaluation requirements will be confirmed in the Grant Offer Letter awarded for successful projects.

All successful projects will be required to participate in evaluation exercises as a condition of grant. Specific additional evaluation may be commissioned to investigate an individual scheme’s innovation focus, and the nature of this evaluation will be discussed and agreed on a scheme specific basis. Timely provision of data is also a condition of the funding.

After initial analysis the data will be collected and published 

7.1 Submitting applications

All correspondence and your completed application submission should be sent electronically to: OptimisedRetroFitProgramme@gov.wales. The relevant Welsh Government ORP lead may also be cc’d within your communication: 

• Daniel Dunning (daniel.dunning@gov.wales) – Overall lead and for financial matters
• Bethan King (bethan.king@gov.wales) – for monitoring, KPIs & progress reporting matters
• Malcolm Davies (malcolm.davies2@gov.wales) – for Supply Chain & Skills and Utilities & Accreditation Organisations. 
• Patrick Myall (patrick.myall001@gov.wales) – for monitoring & technical specification matters
• Darren Hatton (darren.hatton@gov.wales) – WHQS 

7.2 Compliance assessment

Applicants should note the following:

• A fully completed application form, eligible costs and scheme details sheet, and any necessary attachments must be submitted. 
• Applicants have committed to meet all criteria set out on the application form. 
• Applicants have committed to participate in the monitoring and evaluation of funded projects. 
• Applications must have regard for UK Subsidy Control Statutory Guidance. This will be verified by Welsh Government. 
• Welsh Government will request further details, additional information or/and clarification questions as necessary to assess and approve the ORP application forms and applicants are expected to respond to these requests in a prompt fashion.

The proposals will be assessed against how they align with the general aims and objectives of the optimised retrofit approach and the requirements set out above.

Applicants may be asked to provide additional information or/and clarify submissions as outlined above. Applicants will be notified by Welsh Government officials of successful proposals and/or caveated proposals prior to grant offer and award.

8.1 ORP grant offer

A grant letter will be made following the successful completion of all the checks and processes referred to above. A proposed payment profile must be submitted with the submission. Variations to the original grant letter will only be accepted in exceptional circumstances.

Acknowledgement of Welsh Government support should be displayed on all publicity, press releases and marketing material produced in relation to the project, as well as on site during development.

Such acknowledgement must be in a format approved by Welsh Government and must comply with the Welsh Government’s brandingguidelines.

Welsh Government Branding Guidelines | GOV.WALES 

Case studies and media announcements to be sent to;

optimisedretrofitprogramme@gov.wales in pdf format

If you would like further advice or information about the ORP, please email: 
OptimisedRetroFitProgramme@gov.wales

Footnotes

[1] Welsh Housing Quality Standard  (p 20-23 and p 60-67)

[2] PAS 2035:2019 / PAS 2035/2030:2023 • TrustMark (We are now in a transition period whereby the 2019 standards will be withdrawn on 30th March 2025 and replaced with the new 2023 standards.)

[3] An umbrella approach is where accredited company A signs off the work of smaller company B