The Green Deal is a government initiative to improve energy efficiency in UK households.
Various works are offered to residents for no upfront cost, they will eventually be paid back through small payments taken out energy bills.
The Green Deal is the largest home improvement programme since World War II.
As part of the 2011 Energy Act, the initiative aims to make millions of homes and businesses across Britain more energy efficient from January 2013.
Up to £10,000 is available for the works and the money will be repaid back over 25 years. It is important to note the Golden Rule which means the money paid back will never be more than the saving made e.g. if wall insulation saves you £135 a year, you will never pay back more than £135 a year.
The money is not paid back directly to the lender, but added to the property’s energy bills. The person in charge of the energy bills is therefore responsible for repayments (even if the property changes hands).
In other words: the bill-payer will save money and have a more energy efficient house.
Why is the Green Deal needed?
The UK’s 26 million strong housing stock is among the world’s oldest and most inefficient. Half of it is not insulated properly, with 3 million homes posing significant health risks to their occupants.
Most worryingly for both the purse, and the environment, most of the heat in your home escapes through its walls, ceilings and windows. As energy price and fuel costs rise, this issue is something that both the homeowner and the Government must address as soon as possible.
More shockingly, thousands of people are wasting what little money they do have on ancient, and sometimes dangerous, boilers. A huge £850million is spent on healthcare as a direct result of badly insulated homes.
The Green Deal is the Government’s attempt to address this energy inefficiency and enable the homeowner to make significant savings on their energy bills.
How Will The Green Deal Work?
The Green Deal can be broken down to three simple stages.
1. The first stage for bill payers will be an initial consultation or assessment carried out by a qualified Green Deal advisor. The current energy performance of the building will be assessed in order to decide which measures could and should be implemented through the Green Deal. The assessment will also make sure the bill payer will make savings equal to or more than the cost of installing the measures, as part of the Golden Rule
The assessor will then provide the bill payer with a comprehensive quote, including how much the improvements will cost to install, how much the bill payer will be expected to save and how long the repayment will take. The bill payer may then compare this quote with other quotes from Green Deal accredited installers if they want.
2.Once a quote has been established the second step is to arrange financing for the Green Deal plan. The financing is dealt with by the Green Deal Provider, who makes sure that everything is in place for the loan repayments.
The loan repayment is attached to the property’s energy bills. So if the property is sold or passed on the Green Deal repayments will stay with the property. The loan repayment is stretched over a period of 25 years so that the debt is paid back each month in small amounts. The amount paid back will always be less than the saving made e.g. if a biomass stove saved you £90 a year, you will never pay back more than £90 a year back.
3. Once the financing measures are in place the next step is to actually install the new energy efficient measures. This is done by an accredited Green Deal installer.
The Green Deal Provider also has an important role in the process as they overlook all three stages to make the process easier. The provider may arrange an assessment for your property, organise the finance plan for your Green Deal repayments and put you in touch with an installer. The Green Deal Provider also has an important customer service role. Providers have on-going obligations to the consumer during and after the implementation of all Green Deal plans, including customer service related queries or complaints, and comprehensive information for a new bill payer that might move in. More info here
Examples of energy efficiency improvements
Efficiency measures will be prioritised according to the potential savings on the energy bill. This guarantees that wasteful appliances and urgent issues will be dealt with first.
-Cavity wall insulation: costs around £160 and repays in 2 years.
-Full loft insulation: costs £100-350 and repays in 2-4 years.
-An old boiler can be responsible for up to 60% of your energy bill.
-A house can lose up to 70% of its heat through un-insulated walls and roof.
The earliest homeowners will be able to apply for finance for the Green Deal will be 28th January 2013.
However properties can be assessed today, meaning there will be a greater demand for builders and merchants who are Green Deal accredited.
If anyone want to become a Green Deal installer, provider or advisor they must be qualified and authorised.
Only an authorised Green Deal installer can install energy efficiency improvements as part of the scheme.
Only an authorised Green Deal installers will be able to use the Green Deal quality mark, showing they have undergone training and will abide by the scheme’s code of practice.