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How to read your Green Deal Advice Report: a case study

Posted by Linn Rafferty on 4 July 2013 at 2:39 pm

YouGen user OldBarn had a less than satisfactory experience with the Green Deal and told his story in a comment on Cathy's blog. His comments are in italics - my responses are in plain text:

Our house has oil fired central heating and reasonable energy efficiency (but hard to treat cavities). Our electricity bill is around £500 per year and the oil bill £2,500. The EPC (energy performance certificate) said our heating and water heating demand was 18,500 kWh, which for oil equates to around £1,500 (6p per unit, 75% overall efficiency.) The GDAR (green deal advice report) said our annual heating bill was around £1,100. So a factor of three wrong.

Did you have fuel bills available to allow your Advisor to do fuel bill matching? Did you give correct answers to the Advisor’s questions about your use of the home?  Your answers are the first step in getting a good indication of your actual fuel bills, and the fuel bill matching provides a check on this. If you weren’t able to provide fuel bills, the system has to rely on your answers alone; this is why the Advisor asks you to provide actual bills for a full year.  The GDAR can only be as accurate as the information you are able to provide to your Advisor.  

Look at page 2 of your report, which lists some of the values used to match your own use; if these values don’t reflect what you told your Advisor, or you believe you did have fuel bills available that the Advisor could have used, you should contact your Advisor to find out why.  The Assessor Organisation that the Advisor works with should operate a complaints procedure – this is a requirement of the Code of Practice that all Green Deal participants must work to – and the Advisor should be able to give you a copy of this, if you ask for it.  

When I pointed this out to the company (Evolve) which had done the work, they referred me to the asdvisor to whom they had subcontracted the work who blamed the software. I had to work hard to get Evolve to accept that my contract was with them and not the assessor, but still they would not, or could not give me an answer.

What a pity that neither your Assessor Organisation (Evolve) nor the Advisor who visited you was able to answer this.  Although the Assessor has the ultimate responsibility for the work done by their appointed Advisor, it’s also true that the Advisor should be able to answer your questions about your Green Deal report.  

I was also left very confused by the two reports I was sent and asked the questions below, which went round the houses again and remain unanswered.  I am an energy professional and very interested in energy saving and the policies required to increase its uptake in the UK. As such I was prepared to spend time on this. But is the average householder?

The projected savings are different in the GDAR and EPC documents. A note says that they have been "adjusted downwards to reflect variations in buildings, products and installation techniques." The downward adjustment is as much as almost a factor of 2 in the case of wall insulation (but different for other measures). Why are these adjustments made and how are they calculated please? Which do I believe?

Again, your Advisor should have been able to answer this.  The savings shown on the GDAR have been adjusted down to reflect some differences in performance of energy efficiency improvements in the real world, compared to the theoretical performance;  that is what is meant by "adjusted downwards to reflect variations in buildings, products and installation techniques." The EPC shows theoretical savings, and the GDAR reflects this ‘real world’ performance.  

You can believe the EPC figures, as an indication of possible savings, but Green Deal will use those savings estimates for your Green Deal finance. The government decided that this was sufficient reason to reduce the estimated savings for use in Green Deal, to give more certainty that typical savings will exceed the repayment.  They insisted that all Green Deal software must make these reductions, which vary between the improvement measures, because they do not all show the same variability in practice.

Some of the reasons why ‘real world’ savings can be smaller than the theory include:

• the way human beings adapt to their new home after it has been improved, such as heating it to a higher level or for longer hours; 

• for insulation improvements, such as wall insulation, differences in performance in the original fabric of the home compared to its assumed performance, so that the original performance is a little better than the assumption;

• when installed in real situations, insulation can be less than 100% due to variations in buildings, e.g varying thickness of a wall cavity results in varying thickness of the installed insulation - and the effectiveness of insulation varies with its thickness.

• the effectiveness of heating controls in saving money depends on whether the occupier chooses to use them.

The differences are particularly confusing in that the EPC specifically says: "You could finance this package of measures under the Green Deal. It could save you £114 a year in energy costs, based on typical energy use.  Some or all of this saving would be recouped through the charge on your energy bill."  Yet the GDAR report says the savings will be just £64 a year and that the charge will be £95 a year, which is 50% more than the savings. Does this not breach the Golden Rule?

No, it doesn’t breach the golden rule, because this rule is calculated for the typical user.  Your report shows both the savings for the typical user, and also your own likely savings based on how you use your home; they are both shown in the table on page 1.  There is more about this on my earlier YouGen blog, here

You said earlier that your GDAR indicated that your annual heating bill was around £1,100, whereas in fact it was around £2,500 for oil and £500 for electricity.  Your GDAR therefore treats you as a low fuel user compared to the typical user, which on the face of it doesn’t seem to reflect your own circumstances.  If your GDAR had reflected your true fuel use, these figures would more likely have shown that you would make savings that are about, or greater than, the typical figures.  Remember though, the EPC savings figures are going to be higher, because they haven’t been reduced to reflect ‘real world’ performance.  

What are the criteria for a measure to be eligible for finance? The one measure with a green tick appears to give a significantly lower rate of return than some with an orange tick.

The criteria is that the typical savings must be enough to cover the installation cost of the improvement, plus an assumed interest rate of 7%, over a length of time no longer than the expected lifetime of the improvement.

Was the measure with a green tick solid wall insulation? This type of insulation always gets a green tick because of the presumption that solid wall insulation will be partly funded by ECO, which is funding provided by energy companies under a government obligation (the Energy Company Obligation).  ECO is intended to make up the difference in cost that you would otherwise have to pay yourself

The EPC says that only wall insulation can be financed by the Green Deal. However, the GDAR report provides a list of "Green Deal improvements recommended by your assessor" which shows estimated annual savings of £271 and "Typical annual savings - maximum Green Deal repayment in Year 1" of £339. (Presumably the "-" character is a hyphen not a minus sign.) Why this figure? It makes the Green Deal payments more than the savings.

Again, I guess the measure shown as financed by the Green Deal was solid wall insulation? 

The other improvements would be expected to make savings, but they may not make enough savings to fully fund their installation cost, and unlike solid wall insulation there is no assumption that ECO funds will be available to make up the difference.  You could get green deal funds to part pay for them, but would have to ’top up’ that finance from another source.  This is a consumer protection measure to help ensure that Green Deal Providers don’t tie you into repayments that aren’t expected to pay for themselves with their own savings; more information on another of my YouGen blogs, here

You have mentioned that the report indicates that your own savings are going to be lower than typical; the Green Deal repayments are limited by the golden rule, calculated for the typical occupier, and this warns you that for your circumstances, the Green Deal payments could be more than your personal savings.  However, as discussed above, you believe that your fuel bills are about 3 times higher than are shown for you on the GDAR, so your own savings could also be higher.

In the table of Improvements recommended on the EPC, the cost of wall insulation is listed as £4,000 to £14,000 and the repayment is £95 a year. This is just 2.3% of the lower cost figure. How can this make sense when Green Deal finance is much more costly (around 7% I believe)?

Again, for solid wall insulation the presumption is that the cost is topped up out of ECO.  7% is a typical figure for the interest rate, but it will vary between providers.

More about the Green Deal on YouGen

YouGen Guide to the Green Deal

Green deal advice explained

How to get started with the green deal

Green deal assessment v. independent assessment

About the author: @linniR is a consultant, a freelance writer and a Domestic Energy Assessor accredited with the NHER scheme, and she enjoys all three.  She tweets regularly on issues relating to energy efficiency and renewables and provides consultancy, especially in relation to training needs.

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

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7 comments - read them below or add one


panistefaninComment left on: 11 February 2021 at 5:23 pm

Vielen Dank für Ihre Arbeit auf dem Blog! Du machst einen guten Job!

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LondonComment left on: 13 December 2020 at 1:57 pm

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PonkaComment left on: 13 December 2020 at 2:38 am

Very interesting information

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panistefaninComment left on: 30 November 2020 at 11:10 pm

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myxopodanComment left on: 25 October 2020 at 12:39 pm

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softwaretrainingplaceComment left on: 13 April 2020 at 9:08 am

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philsmithComment left on: 31 March 2014 at 12:17 pm

Hi Linn,

I found your blog very interesteing. Case studies are exactly what would help customers ( and GDAs! ) to fully understand the content of green deal reports. Even as a GDA myself I do not always fully understand how the figures are calculated and still do not have 100% confidence in the software. Also, your specific case study would make much more sense if the GDAR were to be available to view, even if it meant downloading it from the OA register.




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