What is the Green Deal?

What is the Green Deal

The Green Deal is part of the Government’s flagship environmental drive to reduce carbon emissions by revolutionising the energy efficiency of British properties. The aim is to find a solution to the current lack of investment in energy efficiency by providing an up-front loan to property owners, who then repay the loan via instalments on their energy bills. However, the cost of the measures should be covered through savings on the energy bill.There is a ‘Golden Rule’ of the scheme that repayments must be lower than or equal to the savings that are made by taking out the loan to do the improvements, protecting participants from higher bills as a result of the loan repayment, for up to 25 years.

Sounds like a good idea, right? In theory it is, however the scheme hit “technical difficulties” before its original October launch date, so only time will tell how well the scheme works.

As with every scheme it has its critics.

Firstly, we are moving from a period where many people were offered basic insulation free into a new regime where the occupier is expected to pay the full amount with interest.

And no two households are the same or have the same pattern of consumption. The formulas to predict what savings can be made are incredibly complicated and energy prices continue to rise so that it’s almost impossible to work out savings.

Much of the energy savings will come via cavity wall insulation, however pre-1919 properties were built without cavity walls and therefore will be less easy to insulate. The measures that stop old houses leaking heat such as secondary glazing, internal shutters and draught proofing, don’t appear to meet the Green Deal requirements.

We’re preoccupied with preserving old buildings and there’s no doubt that any owner of a listed building will have a fight to gain Listed Building’s approval for solar panels on the roof!

Cynics also argue that the loan being attached to the property rather than the occupant is not necessarily fair, because a new occupant may not have wanted the work done on the house, and potential buyers may be put off. The net result will probably be that many prospective purchasers will ask sellers to pay off the loan before completing the sale.

The major hurdle for the Government will be getting the support of trusted retail brands. Whilst companies, such as British Gas and E.On, are planning Green Deal products, other companies such as Tesco, M&S and John Lewis are refusing to back the scheme until they have seen how well it really works.

Despite the confusion surrounding the scheme and the worry that less reputable installers may take participants of the scheme for a ride, the Green Deal could be a success. However, as most experts argue, the Green Deal will only work if energy bills stop rising or potential savings will be eaten up, defeating the point in the scheme.

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