To promote investment in sustainable building and technologies, various forms of 'green finance' are already in place or are under development. These vary from direct subsidy, through to the creation of institutions and market mechanisms that catalyse flows of private and public money into green projects.
The Green Deal
The Green Deal is one of the current Government’s flagship environmental policy, designed to drive significant investment in energy efficiency improvements to the UK’s domestic and commercial buildings.
The scheme is intended to enable homeowners and businesses to have energy saving and generating measures installed at low or no up-front cost, financed by the private sector and repaid through a charge attached to the customer’s energy meter. The “Golden Rule” of the scheme aims to ensure that energy bill savings are greater than or equal to the repayments. Find out more about the Green Deal under our section on Retrofit.
The Green Investment Bank
Recognising the need to have institutions in place to drive the transition to a low-carbon economy, the Government is setting up the world's first Green Investment Bank (GIB). The GIB is intended to play a key role in supporting and overcoming barriers to investment in green projects. Initially capitalised with £3 billion, the bank’s priority areas include investing in energy efficiency projects and building retrofit projects.
Intended to accelerate investment in renewable energy, the Feed-in Tariff (FiT) was launched in April 2010 under the Energy Act 2008. Under the FiT mechanism, businesses and households are paid for generating electricity from renewable sources such as solar, wind and small-scale CHP, and only applied to installations of up to 5 MW.
The costs of the scheme are covered via a levy on energy bills, with eligible installations receiving payments for up to 25 years. Since their launch, the rate of uptake has been significant, leading the Government to rapidly reduce the rate paid for both large (commercial) and small (domestic) installations. Alongside this, various other requirements have been introduced to limited eligibility for the scheme, such as a minimum energy efficiency requirement for domestic installations.
Renewable Heat Incentive
Similar to the FiT, the Renewable Heat Incentive (RHI) is designed to encourage the installation of measures which generate renewable heat. Initially made available only to those installing systems in non-domestic buildings, the scheme was eventually extended to households in April 2014. Technologies eligible for the scheme include renewably powered district heating, solar thermal panels, heat pumps (ground- and water-source), biomass boilers and deep geothermal systems.