Finance for energy efficiency: how the green deal will work
Posted by Cathy Debenham on 17 December 2010 at 10:10 am
More detail about the Green Deal - the government's plan to encourage us all to make our homes and offices energy efficient - were revealed in the Energy Bill earlier this month.
In essence this is a mechanism to enable people to make improvements without having to bear the up-front cost. The 'golden rule' is that as long as the expected financial savings in lower energy bills are equal to or greater than the costs of the energy efficiency measures, you're OK.
How will the Green Deal work?
1. An accredited adviser will assess the energy efficiency of the building, using a system that is likely to be based on an improved energy performance certificate (EPC). They will draw up a list of measures that can be taken to improve it (and have been approved for the Green Deal - in performance terms and in meeting the 'golden rule').
2. You can then take those measures to a variety of installers to get quotes.
3. Your choosen supplier installs the kit.
4. They arrange with the finance provider for the repayments to be taken through a charge on your energy bill.
What if my property doesn't meet the golden rule?
If, for example, you have solid walls, and the cost of insulating them is too high to be paid back out of savings in your energy bill, then there are alternatives. The Government is bringing in a new Energy Company Obligation (ECO) in 2012 which will combine with the Green Deal to help with the more expensive measures. It will also focus on the most vulnerable low-income households, where people can't currently afford to heat their house properly, and for whom energy efficiency measures will mean a warmer house rather than energy bill savings.
Is it only for homeowners?
No it's available in the rented sector too, both for domestic and commercial properties. Either tenants or landlords can start the process, but they must get the permission of any other parties with an interest in the property before going ahead.
Is it compulsory for landlords to improve the energy efficiency of their properties?
No. Initially the Government hopes the Green Deal will be enough incentive. But if it doesn't prove to be, then they have are proposing powers to regulate if necessary. Local authorities will be able to insist landlords of properties with F or G ratings in the EPC make energy efficiency measures that qualify for the Green Deal of ECO.
In the commercial sector they are proposing powers which require landlords to bring properties up to a defined standard (using the Green Deal or equivalent finance) before they can be re-let.
Who will provide the Green Deal?
There will be three customer-facing roles - in some cases they may all be provided by one company. In others they will all be separate.
The adviser, who assesses the energy efficiency of the property, and makes recommendations of measures that meet the golden rule.
The installer: who installs the measures.
The provider: who manages the finance.
The detail of this is yet to be pinned down, and there are likely to be a range of different models. Organisations expressing an interest in getting involved include: energy companies, high street retailers, small energy efficiency companies, builders merchants, housing associations, local authorities and others.
Where does the money come from?
A range of financial institutions and high street retailers,.
Will renewable energy measures be included?
Not initially. It may extend to some microgeneration measures in due course, as long as they meet the golden rule.
When will it be available?
Not until Autumn 2012. The government will consult on its plans in Autumn 2011, with secondary legislation laid before Parliament in early 2012.
Picture by Lyle58
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