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Government ends the Green Deal

Posted by Helena Ripley on 28 July 2015 at 12:15 pm

Only last week, we wrote a blog about the potential changes we might see in the provision of funding for energy efficiency given the cuts that government departments are expected to make. At the time there was no concrete information to back up the figures that the Financial Times article suggested with respect to cuts in the Department of Energy and Climate Change (DECC). However, it has now become apparent that the Green Deal and the Green Deal Home Improvement Fund (GDHIF) have indeed been cut. 

What is the Green Deal and the GDHIF?

The Green Deal is a scheme where a loan is available from the Green Deal Finance Company (who are funded by DECC) for energy efficiency improvements to houses. There is no upfront cost for the installation with the loan being paid off through electricity bills. It has been thought that the low up-take of the Green Deal (only 15,000 loans have either been given out or are being processed) is due to the high interest rates. The GDHIF is a scheme where money is claimed back after an energy efficiency improvement has been made by a Green Deal installer. There is a limit to the amount of cashback that is available. This was very popular and has only been available for certain periods of time; the amount of money that it is possible to claim back has also been decreasing. 

When does this come into action?

On 23 July, Amber Rudd, the Energy and Climate Change Secretary, announced the removal of the Green Deal and the GDHIF. The funding will no longer be available from 30 September or when the remaining £4 million of funding runs out; whichever is sooner. If you have a voucher to claim a refund under the GDHIF you have until the expiry date on the voucher to receive the money.

If you already are part of the scheme – if you are paying back your loan from the Green Deal or have a voucher to reclaim under the GDHIF then you will be unaffected by these changes. 

Some local authorities will still have funding available through Green Deal Communities; DECC will ensure that this remaining money is spent in the best possible way. 

Why have these schemes been scrapped?

These schemes were proving too costly to the taxpayer as there was consistently low up-take; there were also concerns about industry standards. It is suggested that there will be a replacement scheme that the government will devise alongside the building industry and consumer groups. 

An independent review will be conducted into the standards, consumer protection and enforcement of energy efficiency schemes. This will ensure that the future scheme can fully benefit the consumer. 

What are the effects?

If you are a consumer who has already made Green Deal improvements and are already repaying your loan you will be unaffected by this change. Your Green Deal provider will still be responsible for any warranties and maintenance that was specified in your contract with them.

The Green Deal assessment process is still available so it will still be possible to purchase Green Deal assessments. 

Plans to introduce a new tax payer funded energy efficiency scheme will be devolved to the Scottish parliament; it will be their responsibility to decide whether to set up a new scheme for consumers. 

What comes next?

If you are in the process of applying for Green Deal funding it is advisable to do so as quickly as possible as the funding will no longer be available from the 30 September or when the £4 million of funding runs out – whichever is sooner. 

There is still money available for those who most need the help through the Energy Company Obligation (ECO). However this fund will be reviewed in 2017 and incorporated into a new funding scheme that the government is currently working on. 

Currently there is no scheme in place to replace the Green Deal or the GDHIF. DECC says they will come up with a replacement scheme (which will give more value for money) by working with the building industry and consumers to find the most appropriate scheme which is the best value for money. The Scottish Government is responsible for setting up a tax payer funded scheme in Scotland. The Conservative government promised in their election manifesto that they would improve a million homes so we will see what new funding they are planning to offer. 

What do people say about this?

This announcement has been received with mixed responses; the executive director of Which?, Richard Lloyd, greets the removal of the Green Deal as an opportunity for ministers to “put together a realistic new approach that is genuinely good value and helps people to save money by saving energy.” However the Greenpeace UK head of energy and the chief executive of the UK Green Building Council have criticized the removal of these funds calling it a “false economy” and saying that it will “leave the energy efficiency industry battered and bruised”. 

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3 comments - read them below or add one

Helena Ripley

Helena Ripley from Comment left on: 31 July 2015 at 4:19 pm

D Boreham - Thank you for your comment.

I think you are asking about the renewable heat incentive (RHI) which is for heat generating installations.

The current RHI rate started in July and according to the Energy Saving Trust is in place until 30 September. There haven't been any announcements about what will happen after that date. If you are getting money from RHI for an existing installation you should be unaffected by any future changes. If you are thinking about applying for RHI it might be a good idea to do this before the end of September.

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D Boreham

D BorehamComment left on: 31 July 2015 at 2:05 pm

Is there any change, either immediately or anticipated, to the feed-in tariff scheme for solar thermal water heating and air-source space heating?

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Linn Rafferty

Linn Rafferty from JTec Energy PerformanceComment left on: 28 July 2015 at 2:06 pm

You mentioned that the Green Deal assessment process is still available so it's still possible to purchase Green Deal assessments. In fact, most of Green Deal is still available, as it wasn't funded by Government but by private companies.

There's no doubt that the sudden end to these two government funded parts of Green Deal has come as a surprise to the companies that invested heavily to participate in the scheme. Many of these were small companies, one man installers and assessors, who don't have spare money to invest. It's unfortunate that once again, the energy efficiency industry in the UK has been treated badly, given the sudden nature of these closures without any consultation or warning.

However, could I reassure your readers that only two aspects of the Green Deal will end, not the whole Green Deal?  These are the Green Deal Home Improvement fund, and the subsidy paid by Government to the Green Deal Finance Company. GDFC was not the only finance provider, and it's possible that some Green Deal Providers will still be able to offer loans through their other sources. Other aspects of the scheme - the registers of assessors and installers, for instance - are still available.

For readers who are considering RHI for instance, it's important to know that they can still get the necessary Green Deal assessment which they have to put on their RHI application. There are also other schemes that rely on the Green Deal assessment, including some fairly generous schemes in Scotland.  You can find an assessor using the government's search facility, or if you are looking for a local person to provide this service, contact the Green Deal Advisor Association.

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