The Green Deal
Introduced as part of the Energy Act 2011, the Green Deal is designed by the government as a way of reducing carbon emissions and reaching the emissions targets set for 2020.
It focuses, primarily on improving current housing stock by helping homeowners and landlords to pay for the energy efficiency measures their homes require. It is also thought that this will offer a boost to the construction industry and create much needed jobs.
This is the Green Deal in a nutshell, but the following will give a much more in-depth breakdown of how it works, who can benefit and what types of renewable energy options are included. If you want to know if the Green deal is suitable for your needs, you should find the answer here.
How will the Green Deal work?
The government will be setting up an advice line to answer any questions homeowners have about the scheme, but in the meantime the following process is how it is expected to work:
- Customers will request a Green Deal assessment from a registered and trained advisor. The advisor will give recommendations in a Green Deal Advice Report (GDAR) based on the improvements the homeowner can make to their home.
- If your home is deemed suitable you will need to find a Green Deal provider who can offer quotes based on these findings. If your home is not suitable for the Green Deal you will receive advice on other types of measures or grants which might be available.
- You are able to approach other providers to get a number of quotes and when you are happy you can agree to a plan in principle. There is a 14 day cooling off period at this stage and a credit scoring process will be triggered.
- You will also need to find a finance provider (in some cases this may be the provider of the work). You will be able to borrow up to £10,000 which will incur interest in the normal way.
- You will then get all of the details of your products including manuals and warranties and schedule of works. Once the work has taken place you will be asked to complete a final sign off to show you are happy.
- After 14 days has passed the bill payer in the home will start being charged for the work via their agreed electricity supplier. This should never be higher than the amount you are saving on this bill. The finance provider will receive the payment directly.
How safe and reliable will the process be?
The government have said that they will put into place a number of safeguards to protect homeowners. These include:
- The advice line and website
- The assessment will be made by an impartial authorised person or company.
- All current legislation covering mis-selling and trading practices will cover the Green Deal as well.
- A Code of Practice will be in place to ensure all companies working within the sector adhere to certain principles.
- The collection of the Green Deal charge made through the electricity bill will be regulated by Ofgem.
- There will be a clear set of procedures to follow for when a property changes hands.
How will I know who to choose to do the work?
Authorised installers will be able to call themselves Green Deal installers and they will be able to use the Green Deal Quality Mark.
The British Standards Institute is developing a Green Deal Standard which will be guaranteed.
Minimum standards will need to be met before any technologies can be supplied or installed under the Green Deal.
This doesn’t mean that you can avoid following common sense principles and not bother getting several quotes. This is a loan from the private sector and not money which is given away by the government. You need to ensure that you are happy with the amount you are paying and that your quote is competitive.
What types of technologies will be covered by the Green Deal?
The government has called the technologies which will be covered the “Green Deal Measures”. They point out that what might be suitable for one property might not be suitable for another.
However these measures must improve the energy efficiency of the home or building to such an extent that the savings made will outweigh the cost of the borrowing.
The measures include:
- Heating, ventilation and air conditioning: Replacement boilers, heating controls, under floor heating, heat recovery systems, gas recovery systems
- Building fabric: Insulation (wall cavity, flat roof, internal wall, floor and loft), draught proofing and energy efficient glazing
- Lighting: LED lighting
- Water heating: efficient taps and showers or hot water systems
- Microgeneration: Ground and air source heat pumps, solar thermal, solar PV, biomass boilers, micro-CHP
The installation of all of these measures under the Green Deal will depend entirely on whether the Golden Rule has been met: does the measure improve the property to such an extent that enough money is saved to pay for itself?
The Green Deal will run alongside the Renewable Heat Incentive, meaning that you will be able to receive a tariff for the renewable energy gained from the new installation. This will improve the return from your investment.
What might the disadvantages be?
- The government is yet to confirm whether the savings versus payments idea will be guaranteed. It is possible that the savings made might be less than the expected payments on the loan.
- The loan will be subject to interest rates and these are yet to be set – although they will be regulated.
- You may not be eligible for the loan due to your credit history.
- The loan will remain with the house and may influence how easy it is to sell.
- You may not be able to afford the increased electricity bills if your circumstances change.
- You are now paying for measures which were once offered free of charge. Certain deals which are now available such as those offered by energy companies for free insulation may not be available after the Green Deal starts.