Green Finance

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 Investment Bank

Government set up the world's first Green Investment Bank (GIB), which was 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. In 2015 Government announced it would privatise the bank - a process now underway.

Feed-in Tariff

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.

The Green Deal

The Green Deal was the previous Coalition Government's flagship energy efficiency policy. The scheme was designed around a 'Pay as You Save' model: householders received up-front finance in the form of a loan to pay for energy saving measures which was then paid back using the savings made on their energy bills.

In July 2015, the Conservative Government announced it would no longer fund the Green Deal Finance Company (GDFC) which financed Green Deal loans. This means that meaning that no new Green Deals are currently being offered, although existing loans will not be affected.