The ‘Green Deal’ will be officially launched this December, although it has been open for business for several months now. The problem right now is though, that there isn’t any (business that is). No-one has yet signed up for a Green Deal package, although the Minister responsible for the programme is confident that a £2.9 million advertising campaign together with the lure of a ‘cashback’ plan for those signing up may put this right in the next few months. The scheme, to finance extensive efficiency improvements to houses across the country really needs to work well – perhaps retrofitting up to 200,000 homes a year if targets to radically improve the energy efficiency of Britain’s woefully ill-equipped housing stock are to be met. But the innovative method of financing the ‘deal’ – a charge on energy bills to repay a private ‘loan’ to carry out the work – may also be its biggest challenge.
The interest rate to be charged on the loan is likely to come in at about 7% or so, which both restricts the amount of work to be done whilst still keeping to the principle that long-term savings to bill-payers from the deal outweigh the charges placed on the bill, and makes the financial offer look decidedly unattractive to most. Despite some valiant efforts, Government attempts to ensure that this interest level can be reduced have not borne fruit at the time of launch and it looks as if there will need to be some additional incentives – stamp duty relief on sale or similar – to kick-start the process.
A ray of hope is provided by the early work that some Local Authorities and housing associations have done in developing local programmes by acting effectively as ‘Green Deal ‘ agents – and being able to borrow funds to cover work at much lower rates of interest. So if you live in Birmingham, Newcastle and a number of other localities, the prospects may be brighter for your home than elsewhere, and for people with harder-to-treat homes the possibility of underwriting of work through a combination of local authority-backed green deal and the companion Government programme, ECO (The energy company Obligation) looks promising.
It is early days, and there is time for the scheme to turn around : it certainly needs to be successful to , among other things, discharge the UKS climate change emission targets for the domestic sector. Government should be keeping a close and flexible-minded eye on the options ahead to make sure it does.
This article originally appeared in the winter 2012 / 2013 edition of EAEM Energy & Environmental Management.