(Green) Deal or No Deal?

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.

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3 thoughts on “(Green) Deal or No Deal?

  1. ECO work is finally beginning to move ahead across the country with Solid Wall Insulation SWI and gas and oil condensing boiler replacements two of the main drivers. The Green Deal is slower due to software areas still being unresolved and Green Deal Finance being limited. Expect April to be the key month when numbers will start to increase for all areas.

  2. The Green Deal will be officially launched THIS December? Surely it has been around since October2012.
    Is this column perhaps a mistaken reissue of one written this time last year?

  3. ECO may well be underway but it’s not all good news many installers are not going to get paid due to errors in submissions which means that Ofgem won’t approve payment and therefore the GDP’s/brokers for ECO won’t get paid and they can then blame installers.

    It’s yet another example of the government trying to run before it can walk and rushing schemes through for political reasons, yet strangely this merely comes back and bites them.

    Green deal as is proven by lack of uptake was launched before it was ready, almost a year on now it has achieved nothing not because the public don’t want it, because it still cannot function and the public don’t perhaps know about it or understand it, but primarily it cannot function
    .
    The most disappointing aspect of ECO is that it seems to only promote boiler changes and not upgrades in general and boiler manufacturers are not acting in the spirit of the scheme, how do you justify replacing a 2 year old boiler under the scheme with no upgrades to insulation, no weather compensation, specifically no power flushing of the system and in many cases not even a magnetite filter being required! How long before these boilers will also need to be replaced?

    The whole system needs to be reviewed NOW!

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