The Green Deal

The Green Deal was a UK government policy initiative that gives homeowners, landlords and tenants the opportunity to pay for energy efficient home improvements through the savings on their energy bills. At the heart of the Green Deal is the rule that savings on bills will exceed the cost of the work. By meeting this 'Golden Rule', consumers will be able to receive energy savings for free. Consumers will then pay back the cost of such improvements through the expected savings in their energy bills. There were 45 different types of improvements available under the Green Deal, ranging from loft and cavity wall insulation, innovative hot water systems and condensing boilers to more costly measures such as solar thermal energy or solid wall insulation.

This was a unique financial structure with no debtor, instead the burden stayed with the property no matter the tenant. This means new tenants or owners become liable for the payments for the energy efficiency improvements, requiring new legislation in English law. Government estimates say that a typical three bedroom semi-detached house could save £270 a year from solid wall insulation.^[1]

It was hoped the Green Deal would lead to the renovation of the UK's housing stock with an estimated 14 million homes seeing energy efficiency improvements ranging from; double glazing, cavity wall and loft insulation through to gas and oil boilers, and renewable technologies such as solar PV, solar thermal and heat pumps.^[2]

History

It was given a 'soft' launch by the Department of Energy and Climate Change on 1 October 2012 to permit improvements for energy saving measures for properties in Great Britain and was officially launched in January 2013. Following this, the first Green Deal Plans were available from 28 January 2013.^[3] The registers of Green Deal Installers, Green Deal Assessors, Green Deal Advisers and Green Deal Providers became active at the launch in October 2012. In its first six months 38,259 Green Deal assessments had taken place. However, only four Green Deals had been taken out ^[4] due to the finance not available until Green Deal Plans formalised on 28 January 2013.

Green Deals were repaid at a rate no more than 6.92% fixed rate unsecured over the life, up to 25 years - this lower rate and duration are unprecedented in high street finance or available loans. The finance were mistakenly compared to home loans of similar duration, but had limited periods of fixed rates of 5 years or less, and secured against the house.^[5] Surveys found little awareness among the general public for the Green Deal.^[6] The mistakenly perceived high interest rates and charges of the scheme were heavily criticised.

Lack of demand for the Green Deal was partly due to the ECO grant programme, which gave homeowners substantial grants in competition to the Grean Deal^[7]. This left the energy efficiency industry struggling, the lack of demand has led one company, Domestic & General Insulation, to completely withdraw from the market and will likely lay off 600 staff.^[8]

In 2014 a second Green Deal was launched, as grants rather than the loans which had underpinned the original scheme^[9] On 1 May, the Government announced the new Green Deal Home Improvement Fund (GDHIF), a new energy efficiency incentive available to households in England and Wales for taking measures to improve the energy efficiency in their homes. The households will be eligible to claim up to £7,600 for improving their homes. The Incentive went live on 9 June 2014.

While the Department of Energy and Climate Change reached its target for the schemes to improve 1 million homes by March 2015, it also made the decision in July 2015 following the election of Conservative Government The Energy Secretary Amber Rudd announced the Green Deal would be scrapped ^[10]. There was no opposition to the scheme being scrapped but there was concern that there was no replacement scheme.^[11] In total 15,000 Green Deals had been issued. Former Climate Change Minister Greg Barker stated he was confident that the private sector would pick up the slack from the withdrawal of Government funding^[12]

How it worked

Homeowner would make energy-saving improvements to your home or business without having to pay all the costs up front through the Green Deal. ^[13]

First, an assessment by a government registered assessor of the property to see what improvements can be made and how much it could save on energy bills.

Secondly, homeowner would choose a Green Deal provider to carry out the work. Only work that would reduce the energy bill highlighted by the assessor would qualify.

Thirdly, A Green Deal plan is signed. This is a contract between homeowner and the provider stating what work will be done and how much it will cost. The provider will then arrange for a Green Deal installer to do the work. The funding for these measures is then issued by The Green Deal Finance Company (GDFC)

Lastly, once the work was complete, the homeowner or tenant would pay off the cost in instalments through their electricity bill.

Gemserv has been contracted as the scheme administrators for the Green Deal Oversight and Registration Body (GD ORB), alongside its role of operating the Microgeneration Certification Scheme(MCS) and the Biomass Suppliers List (BSL). The GD ORB manages scheme administrative functions, such as maintaining the public registers of authorised participants and participant helpdesk; as well as working alongside industry and government to further develop and share best practice in operational processes, and raising awareness about consumer protection issues.

Improvements covered

Initial list of improvement measures available under the Green Deal;

Heating, ventilation and air conditioning

• Condensing boilers
• Heating controls
• Under-floor heating
• Heat recovery systems
• Mechanical ventilation (non-dom)
• Flue gas recovery devices
• Ground source heat pumps
• Air source heat pumps

Building fabric

• Cavity wall insulation
• Loft insulation
• Flat roof insulation
• Internal wall insulation
• External wall insulation
• Draught proofing
• Floor insulation
• Heating system insulation (cylinder, pipes)

Lighting

• Lighting fittings
• Lighting controls

Water Heating

• Innovative hot water systems
• Water efficient taps and showers

Fenestration

• Energy Efficient Glazing and Doors

A further 15 Green Deal measures ^[14] have been confirmed and include;

• Chillers
• Duct Insulation
• HVAC Controls
• Hot Water Controls
• Hot Water Showers
• Hot Water systems
• Hot Water taps
• Pipework Insulation
• Roof lights, lamps and luminaires
• Radiant heating
• Sealing improvements
• Solar blinds, shutters and shading devices
• Transpired solar collectors
• Variable speed drives for fans and pumps
• Water Source Heat Pumps

Criticism

The Green Deal was included in the Energy Act 2011 and came into force on 1 October 2012. DECC announced a list of pioneer Green Deal providers in April 2012. Twenty two providers, including three of the biggest six energy companies and B&Q, (the only high street name) have signed a declaration stating they intend to become Green Deal Providers, once DECC had appointed the Green Deal Oversight Body. Other expected providers such as Tesco, Marks and Spencer and the other three major energy companies were missing from the list.^[15] Fears of low take up of the Green Deal has led Government to budget £200 million to encourage early uptake.^[15] The policy caused a rift in the Coalition Government in April 2012. Senior Conservative ministers, including Eric Pickles ( Communities and Local Government Secretary), called for the scheme to be scrapped as it could cost the so-called "squeezed" middle, thousands of pounds.^[16][17]

The building industry has raised concern about the lack of stimulus to drive demand for the uptake of the Green Deal.^[18] Other worries include its limited projected coverage to consumer protection, its treatment of non-domestic buildings and lack of competition among suppliers.^[19] Government has confirmed the Green Deal for business has been put on hold for the foreseeable future.^[20]

There has also been doubts cast over whether the central tenet of the scheme - the so-called "Golden Rule" whereby the cost of repayments never outweighs the savings on the bill - will actually be successfully implemented.^{[21] [22]}

While The Green Deal is primarily concerned with buildings' energy efficiency, it is often associated with reducing carbon emissions, and mitigating climate change. However, the effects of Jevons Paradox, and cash savings being spent on other products and services with associated carbon footprint, means that The Green Deal may not reduce carbon emissions, unless there is a corresponding supply-side constraint, keeping coal, oil and gas underground.

The choice of Gemserv as the certification body has also provoked criticism as it is owned by the 6 largest energy companies in the UK and so will act as a barrier to small businesses being certified and thus benefiting from the green deal. This would undermine DECC objective of promoting green growth with the scheme.

David Cameron has defended the Green Deal, stating that despite the lack of interest from the general public and a slow take-up, the policy was never intended to start with a big bang, but rather to build slowly.^[23] Nevertheless, the government has invested heavily in generating early uptake by consumers.

There have also been issues with conmen posing as Green Deal assessors. Trading standards officers have reported that cold callers are posing as Green Deal assessors while charging "administration fees"^[24]

The Green Deal Home Improvement Fund (GDHIF)

The Green Deal Home Improvement Fund (GDHIF) is a new incentive scheme open to all householders in England and Wales wanting to improve the energy efficiency of their homes^[32].

The scheme allows Householders to choose one or both of the two core offers available and may also be eligible to claim up to £7,600 as a bundled package. The policy closed to new applications on 24 July 2014^[33]

Core Offer 1

Up to £1,000 for installing two energy saving improvements from the list of 12 eligible measures below:

1. Condensing mains gas boiler
2. Fan assisted storage heaters
3. Flue gas heat recovery
4. Replacement warm-air unit
5. Waste water heat recovery
6. Cavity wall insulation
7. Flat roof insulation
8. Floor insulation
9. Room in a roof insulation
10. Double/triple glazing (replacing single glazing)
11. Secondary glazing
12. Energy efficient replacement doors

Core Offer 2

Up to 75% of the total cost of the installation of internal or external solid wall insulation, up to a maximum value of £6,000, making this high carbon saving improvement much more affordable.

Core Offer 3

Householders can also claim a refund of up to £100 for a Green Deal Assessment Report (GDAR) that is less than 24 months old when they do work in this scheme.

Core Offer 4

An additional bonus of up to £500 for homebuyers who have bought a home in the last 12 months prior to application.

Requirements

To be eligible for the GDHIF scheme offers householders must satisfy the following incentive criteria:

• Customers must apply for the voucher before the work starts
• Measures must be recommended in an Energy Performance Certificate (EPC) or GDAR carried out in the last 24 months
• The GDHIF can work with Green Deal Finance which could be used to help to pay for some of the costs of installation
• Customers will not be eligible for the GDHIF incentive if they receive ECO or other central Government funding, on the energy saving improvements applied for under GDHIF

This scheme closed on 24 July, due to overwhelming demand. In October 2014 however, the Government announced an additional £100m of funding would be made available for the GDHIF phase 2 although further details are yet to be revealed.^[34]

The Green Deal Finance Company

The Green Deal Finance Company (TGDFC) was a £14 billion industry led consortium with over 50 members from across the industry, both public and private sector. The Company was incorporated in March 2012 as a not-for-profit mutual limited by guarantee. It is a national aggregator designed to make finance available to all accredited Green Deal Providers on an equal and open basis. By operating at a national level, it intends to minimise the operating and administration costs of Green Deals and will aim to access the cheapest sources of finance in the market at the highest possible credit rating. It worked closely with the Department of Energy and Climate Change (DECC) and the Green Investment Bank, together with a number of Local Authorities, with a view to maximising its assistance to the Green Deal market ^[35].

See also

• CRC Energy Efficiency Scheme
• Climate Change Agreement
• Capital allowance
• Energy policy of the United Kingdom
• Energy use and conservation in the United Kingdom
• Renewable Heat Incentive
• Renewables Obligation
• United Kingdom Climate Change Programme
• Feed-in tariffs in the United Kingdom
• Energy Company Obligation

References

External links

• Green Deal - Department of Energy and Climate Change
• Green Deal Oversight and Registration Body