The Green Deal Overview
The Green Deal aims to improve energy efficiency for 26 million homes and up to 2.8 million commercial properties by the year 2030. With such ambitious development plans set in place,
The Green Deal is a UK government initiative designed to help meet the up-front cost of making homes more energy efficient.
It is due to be launched in October 2012 and will allow consumers and businesses to install energy-efficiency measures and pay for the improvements through savings on the fuel bill.
Although the costs will be repaid, this is not a conventional personal loan as the charge is attached to the meter and paid back through the electricity bill.
Once the Green Deal measures have been installed, repayments will appear on the customer’s bills as a separate charge.
The amount of finance that a Green Deal Provider can attach to a customer’s electricity bill will be limited by the Golden Rule principle,
The Golden Rule
The Green Deal’s Golden Rule states that the energy savings a property makes in a 25 year period must be equal to or more than the cost of implementing the changes in the first place. This ensures that the property owner is not paying back more to partake in the Green Deal than they are saving on their energy bills.
The “Golden Rule” also states that each property will be accessed individually, by an accredited, objective advisor and allocated an amount of money, dependant on the potential savings. Installations must also be carried out by accredited installers. This ensures that the property owner is not investing money in work which will not save them money on their energy bills.
Participants in the Green Deal scheme will be able to install energy efficiency measures, heating upgrades, micro-generation, light fittings and controls at no up-front cost. Measures must be:
Recommended in an Energy Performance Certificate, which will form part of a Green Deal Advice Report produced by an authorised Green Deal Advisor.
These measures must be Installed by an authorised Green Deal Installer that meets the Green Deal Standard and carries the Green Deal Mark.
The scheme will work alongside ECO to help the most vulnerable and will support the delivery of more expensive measures, such as solid wall insulation, in homes which need more work than Green Deal finance alone can stretch to.
Energy Company Obligation (ECO)
The Energy Company Obligation (ECO) will replace the existing Carbon Emissions Reduction Target (CERT) and Community Energy Saving Programme (CESP), which will both expire in 2012 and it will be split into two elements:
- The Carbon Saving Obligation, This will provide additional support for homes that do not meet the ‘Golden Rule’ and therefore cannot fully fund energy efficiency improvements through Green Deal finance alone. It is proposed that funding under the carbon saving obligation would only be available for packages which include solid wall insulation.
- The Affordable Warmth Obligation, which is designed to provide support to low income and vulnerable households who are least able to heat their homes to an adequate standard. This funding will be focused on a similar group of benefits and tax credits recipients to those identified through the current CERT Super Priority Group, with the additional restriction that only properties in private tenures will be eligible.
So What Do I Think About The Green Deal
The Green Deal is intended to help people avoid the major sticking point with making a house more energy efficient, namely the fairly significant up-front costs that are usually involved.
It’s a great idea to spread the capital cost over the lifetime of the things that are being installed, this and the added benefit of being able to pay these costs off early and save more money make it on the front a very worthwhile thing to do, but there are a few sticking points:
The Golden Rule says that the repayments must cover the cost of the measure, but mustn’t exceed the savings to be made by installing it. That creates some problems with expensive things like solar PV and some of the more expensive renewable technology coming through
Solid wall insulation is very expensive, but it’s also very important, so the Green Deal has already partially addressed that one. It’s important because about 85% of our existing homes will still be here in 2050, so about 26 million homes will need retro-fit insulation. Some 6.6 million of those, including 48% of high rise flats, have solid walls. This is where the ECO will step in and hopefully pay for the cost of these measures.
Green Deal is financially loaded towards hard-to-treat properties like these by the use of the Energy Company Obligation, using CERT and CESP money, but energy companies are currently (March 2012) lobbying for a delay to Green Deal while they sort out the financial issues. There’s also a national shortage of accredited installers for solid wall insulation.
The measures to be installed must be recommended in an EPC prepared by an accredited Green Deal Advisor. As of March 2012 there is no such animal. EPCs are currently prepared by Domestic Energy Assessors. They have all had their fingers badly burned by investing thousands of pounds in training and then finding that there was a huge over-supply in the EPC market. They won’t be too keen on investing yet more money in training, and in any case the training proposals currently being touted around look far too onerous to be sensible.
In general I am personally all for it and think its a great idea one can only hope that the government gets it right and everyone should benefit from this great scheme
If you require any other information on this topic feel free to visit my website at The Green Deal, alternatively visit the energy saving trust or DECC for some official information and updates.