What Is the Green Deal?

Many of you may have heard whispers about the new government initiative called the Green Deal. Scouring the web you will find lots of pages linking to the scheme but very little in depth information. The reason for this is, nobody knows the full facts, included in this group is the government itself. This is a little worrying considering the Green Deal is due to start in October of this year. The basic structure is there but there is still so much ambiguity surrounding how this will actually work out.

The initiative itself should be an enormous boon to householders, landlords and tenants it allows all of the aforementioned groups to have much needed energy efficiency measures installed on their properties without the need for them to pay the huge upfront costs however mystery shrouds how this in practice will play out.

In a nutshell it works thus: Homeowners, privately renting tenants and landlords can take a look at their properties and think things need to be done, so the first is to engage a Green Deal accredited assessor to visit the property to carry out a survey. The assessor has to gain the new qualification to be accredited to the government standard and it is said that the assessor must also be completely independent meaning he should not be tied to any Green deal providers (the financiers) otherwise he will become nothing more than a glorified salesman with minimum qualifications working on behalf of one of the large energy companies.

The Assessors job is primarily to assess your property and make recommendations as to where your home could improve its energy rating. The government is committed to make all housing reach at least a C grade on the energy efficiency rating scale. The great thing about this is that it opens up a lot of technologies to occupiers they otherwise couldn’t afford and can go a long way towards eradicating fuel poverty. The assessor can recommend any number of measures including:

• New double glazed windows and doors

• Roof insulation

• Cavity and solid wall insulation

• New lighting systems

• Solar PV

• Solar thermal

• Replacement boilers

• Ground source heat pump

Now anyone of us can look at the above list and think ‘My house could do with one or more of those things’ but the major reason we put them off is purely down to funds, so the Green Deal is an excellent idea.

The next step once the assessor has made his recommendations is to contact a Green Deal provider, the provider is essentially the bank that will give you a ‘Green’ loan to finance the project. The Deal is neither credit checked nor means tested so from prince to pauper qualifies another excellent idea. The provider will offer finance up to £10,000 to complete the project which you can add to if you wish more work carried out. The only qualifying factor required is that your project passes the “Green Deal Golden Rule”.

The Golden Rule states that the home improvement implemented must save more money than it costs over a certain period of time. That period of time or loan repayment time period can be anything from 10 years up to 25 years. So in effect how this will work will be: For example if through the Green Deal scheme you decide to have your complete property fitted with new double glazing that cost £5000, the assessment you have had states that by having new glazing it will save you £500 a year on your electricity bill so over 10 years your new double glazing will have paid for itself.

I don’t want another loan, I have enough commitments already, I hear you cry.

This is where the scheme really is an innovation and maybe just the tonic householders need. Your Green Deal loan is paid back through your electricity bill. The idea is that the money the new installations are saving you yearly will go toward paying for your loan so if for example your electricity bill £1000 per year before your Green Deal project after your improvements your electricity bill may be £650 per year. You will still pay £1000 a year for your electricity but £350 of that goes towards paying your loan, so you won’t notice any savings but your bills won’t go up and you have a nice shiny new energy efficient home.

The new rules also state that the loan is tied to the property not the individual. Because the loan is paid through the electricity bill if you have Green Deal improvements and decide to move the new owner or utility bill payer will be responsible for the repayments however they will still be benefitting from all the home improvements.

The final stage is fairly straight forward you need to contact an accredited installer to quote for your work obviously you can have as many quotes as you like to make sure you are getting the best deal, once you have found your installer he will carry out the work and be paid directly from your provider.

All in all on the face of it this is an excellent scheme allowing everyday people to get life improving changes to their property as well tackling fuel poverty, But there is issues that need answers such as:

• Will this scheme be open to abuse by the big players by using their own energy assessors and installers or will it be truly independent. This is an opportunity for smaller companies to gain more work and it should create many thousands of new jobs.

• Who will pay for the initial assessments, if it is the homeowner then uptake will be very limited

• What interest will be paid on the loan I have heard figures of anything from 2% to 7%

• Will the government U turn on this and end up with another Feed in Tariff style fiasco

If we can get answers on these and quickly and the government introduce easy to follow and user friendly system I foresee the Green Deal being a huge success and for once a I would give the coalition a massive pat on the back.

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