Pay-as-you-save home refurb set for relaunch after sale of Green Deal loan book?
Posted by Gabby Mallett on 26 January 2017 at 1:21 pm
I can’t remember how many blogs have a written on Green Deal, but I know it’s an awful lot. I was heavily involved with it in the early days, working with big organisations who intended to become Green Deal Providers, working with DECC (now BEIS) to help them to analyse how all the different policies would interact and even working with expert solicitors to get the first Green Deal Plans written.
Sadly the Green Deal didn’t ever take off as everyone hoped it might. It was beset by bad publicity about the interest rate or the lack of good installers and because the government failed to reach its targets (a million in this parliament) quickly it seemed to have ditched the idea. It had been launched with quite some fanfare. Jesse Norman, energy minister was quoted as saying, back in 2013, that the Government had ‘committed to improving the insulation of more than one million homes over this parliament’. Of course we have a different Government now.
Over the past year installers have been letting their Green Deal Accreditations lapse. Providers have not been actively selling Green Deal Plans since the Green Deal Finance Company (GDFC) stopped offering them in July 2015.
This left us thinking that the Green Deal, and particularly the pay-as-you-save mechanism, had been a good idea, but that it hadn’t been well executed.
But just look what has happened now. An ‘independent acquisition company’ called Breen Bidco No1 Limited, has bought up Green Deal Finance Company Services Limited. The new company is jointly owned by two others, Greenstone Finance Limited (“Greenstone”) and Aurium Capital Markets (“Aurium”). No, I hadn’t heard of any of them either.
So what have they bought and how much have they paid. It seems that they have paid out £40 million pounds and have bought just about everything the GDFC owned. They now take over the loan book (around 13,700 loans with a book value just under £50m), so current Green Deal Plan payments will still get processed (don’t worry if you have a Green Deal Plan - you shouldn’t’ notice any difference). They have bought the logo, the house with the tick that is already quite familiar to us. And now they intend to start selling Green Deal Loans again, by the end of March.
What do we think about this?
I think there are some real positives here. The fist being that the GDFC, with its proceeds of sale, has paid back a loan that it had from BEIS of £20.2m. The second is that it will be great to have someone in the market place selling loans which help people to renovate their homes to improve their energy efficiency and the third is that the pay-as-you-save mechanism is a great idea that helps people to install energy efficiency measures with no up-front costs.
The chief executive of Greenstone, one of the companies behind the buyout, seems to agree with me. He has said: “We believe that the concept of repaying your loan as you save on your energy bills is an excellent one and with the significant private investment that we have secured, we’re looking forward to rolling the Green Deal finance scheme out across the country. We will provide homeowners a cost-effective way to improve their homes and quality of life.”
What’s the downside?
Well there isn’t an obvious one yet, but I do think it’s a case of watch this space. The issues with the Green Deal will not be resolved overnight and it may be that the public already associate the brand with high repayments and poor service. Another concern of mine, and I may just be being a bit cynical here, is that these companies all appear to be relatively new and I wonder how much experience they have in supporting individual customers with energy efficiency and renewable energy. I am not writing them off already, but I do think they will have a steep learning curve if they really want to make this work.
Of course, YouGen will keep you posted on developments.
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