The Green Deal
The Green Deal is Government's flagship energy efficiency policy, aiming to drive improvements in millions of UK homes at low or no up-front cost to the customer.
What is the Green Deal?
Launched in January 2013, the Green Deal is the Government's flagship retrofit initiative. It is a market-based mechanism which aims to overcome three major barriers to home retrofit: a lack of upfront finance; the availability of reliable information about which measures to install, and the low levels of consumer confidence in the building supply chain.
Green Deal Finance
The scheme is designed around a 'Pay as You Save' model (as originally proposed by the UK Green Building Council in 2009) with private finance being provided to meet the up-front cost of Green Deal-eligible energy efficiency measures. The householder receives this up-front finance in the form of a loan which is paid back by savings made on their energy bill. But, unlike a normal loan, the responsibility for repayments is attached to the property’s energy meter rather than the householder. This means that if the current householder moves out, the repayments are passed on to the next occupier who is now benefitting from the installed measures.
A key aspect of the scheme is the 'Golden Rule', which states that repayments should not exceed the expected energy bill savings from the installed measures. The Golden Rule is intended to ensure that householders are not worse off because they will not be paying more for their combined energy bill and Green Deal repayments than they had been on their energy bill alone before the measures were installed.
Green Deal Assessments
A home energy assessment is needed before measures can be installed under the Green Deal. The Green Deal Assessment rates the current energy performance of a property and provides the householder with information about potential energy saving measures that would be eligible to receive a Green Deal loan,
Green Deal Accreditation
Measures available under the scheme must be installed by an accredited Green Deal Installer and the loan offered by a registered Green Deal Provider company. Green Deal Assessments also need to be carried out by accredited Green Deal Assessors. This accreditation framework is intended to ensure high quality installations and assessments and provide householders with a complaints and redress process if there are problems.
Non-Domestic Green Deal
Although the scheme is primarily aimed at homes, the legislation is in place for the Green Deal to be offered to commercial properties. Green Deal Assessments are available for non-domestic buildings but there are no companies currently offering Green Deal loans for these properties.
Our involvement in policy development
The UK-GBC has been involved throughout the development of the scheme and played a key role in developing the “Pay as You Save” model. Since the launch of the Green Deal we have continued to work with Government to shape its development, and to help members play a leading role in its delivery through roundtables and events.
We are keen to ensure that there are sufficiently strong incentives for businesses and households to take up energy efficiency measures (including via the Green Deal), and to create a compelling market opportunity for industry. Our Retrofit Incentives report outlines proposals for the three most promising options - variable stamp duty, variable council tax and an energy efficiency feed-in-tariff.
Another priority for UK-GBC is reducing the interest rate charged on Green Deal loans. Interest payments have a direct impact on the amount that can be borrowed by each household and higher interest rates can make more expensive measures ineligible for Green Deal Finance. Our Green Deal Finance report examined the impact of high interest rates charged on Green Deal loans and explored options for reducing these charges.
Green Deal Home Improvement Fund
The Home Improvement Fund is an incentive scheme which offers householders cashback for installing certain energy efficiency measures. Householders can receive £1,000 for installing two from a list of twelve eligible measures, or can receive £4,000 for installing the more expensive solid wall insulation. More information is available on the DECC website.
Green Deal Communities
The Green Deal Communities fund allocates money to Local Authorities to help drive local programmes of home energy efficiency. These Local Authority programmes are intended to drive interest among local residents and encouraging the installation of measures under the Green Deal or funded through the Energy Company Obligation. Local Authorities can find out more about how to get involved in the Green Deal here.
Energy Company Obligation (ECO)
The Energy Company Obligation (ECO) policy sets targets for the major energy suppliers to deliver energy saving measures to households. The delivery of ECO is funded by the energy suppliers via levies on household energy bills. The targets are split between delivering bill savings to low income households and making carbon savings through cost effective measures. ECO subsidies was originally intended to be combined with Green Deal finance to fund more expensive measures, but in practice this blending of finance has been largely unsuccessful. Find out more about ECO here.
Information for householders
If you are a householder looking for information about the Green Deal or other ways you can improve the energy efficiency of your home, you can visit the Energy Saving Trust website or contact the Energy Saving Advice Service on 0300 123 1234.