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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


If you have a question about anything in the above blog, please ask it in the comments section below.

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4 comments - read them below or add one

Mark Brown

Mark BrownComment left on: 31 March 2011 at 10:26 am

Of course there is nothing here for early adopters either. Leading on from what Mike wrote in December: given that this is a "choice" then it is one only a small subsegment of society will ever take. Needless to say most of the people reading THIS will jump at the chance. I for one would love a cash injection to fit triple glazing to replace double glazing on some of my windows. However, I very much doubt I would qualify because my home has 300mm loft insulation and cavity wall insulation. Since my home and hot water is heated by a wood pellet boiler and solar thermal then the additonal "win" from triple glazing would hardly make a big dent in anything. Since I don't buy gas how will my savings in wood fuel be used to pay back the money?

In short: those of us who would happily adopt the Green Deal are probably the least suited and won't qualify because we are too far ahead of the game. This may well be fair if we wish to target the victms of fuel poverty so I can't begrudge this approach. But for many of us early adopters the Green Deal is there to drag the rest of society along our trail-blazing path.

Good luck to it... But there is nothing in it for me.. Or is there?

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fuelexplorerComment left on: 23 December 2010 at 12:55 am

I live in a solid walled early Victorian house and have started to insulate because it's the most cost effective method of reducing my power bills.  All methods are expensive and cause major upheaval, with the exception of secondary glazing!  I have already insulated the loft.  Lining the 20 sq/m of exterior walls of a bedroom has increased the surface temp. by 5 degrees C compared with uninsulated walls. I fixed 25mm battens with 25mm thick intervals, then relined with plasterboard, and skimmed. The effect has been significant.  In my kitchen I have the original concrete base, with a 50mm Celotex layer sandwiched with Lithotherm 45mm clay blocks with underfloor heating, covered with ceramic floor tiles.  This has been supplemented with a 7Kw log burner.  Very, very expensive. Our sitting room has just had a floor makeover on the existing concrete base, 25mm battens with 25mm Celotex intervals, covered with 18mm plywood, 10mm underlay and then carpeted.   The sitting room has also had installed a 5Kw log burner. All these methods presented significant upheaval. I took the opportunity to install new copper central heating pipe runs and oversized rads.  The log burners have made a serious contribution to both the heat contribution and character of the sitting room.  Secondary glazing was also a highly successful strategy over the drafty sash windows.

In retrospect, wall lining and secondary glazing have had the most immediate heat conservation effect. Next underfloor insulation.  The thickness of insulation was determined by architectural factors & heat savings.  

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Cathy Debenham

Cathy DebenhamComment left on: 21 December 2010 at 9:44 am

This may work for the houses where loft and cavity wall insulation hasn't been done, as it's relatively easy and doesn't cause much upheaval (unless you've got an attic full of stuff). But there are lots of solid wall houses which are much more difficult and expensive to do - and if done internally it is very disruptive and makes all the rooms smaller.

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Mike Maybury

Mike MayburyComment left on: 20 December 2010 at 9:46 pm

Unless there is some limit in place, surely this should mean that all houses should be able to become adequately insulated.

Howeve, because so many people just do not seem to care or bother to do anything out of routine, I guess that, within, 5 years, less than 10% of houses will have been properly insulated.

It is what is nowadays called 'choice'. It is the same people who 'choose' to kill themselves by smoking, excessive drinking and eating animal foods to excess.

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