The Green Deal
“The Green Deal” is a scheme proposed by the Government to help homeowners improve the energy efficiency of their homes thus reducing their energy usage. Basically the theory is that the scheme will enable householdersto install energy efficiency measures at no upfront cost providing that the proposed energy saving improvement can be proved to be cost effective. This is a revolutionary idea that will benefit homeowners who are unwilling or unable to pay for the particular energy saving measure themselves. It is currently believed that the installation of energy efficient windows and doors are to be included within the scheme as it is recognised that up to 30% of a home’s heat loss can be due to ill-fitting windows and doors.
Green Deal finance will not be a personal loan on the householder or building owner but will in fact be a debt held on the property. Future owners of the property will take on the remaining elements of the Green Deal until payment is complete.
The assessment of the property will produce an Energy Performance Certificate (EPC) and this will identify the current provision of measures within the property and those which could be improved.
Ideally the Government would prefer to see the Energy Assessment undertaken by an independent accredited assessor to ensure customers have a strong and impartial base on which to choose a Green Deal that is right for them. However, as assessments will not be funded by the Government, it will be for the market to decide how the cost of an assessment will be recouped. The Energy Performance Certificate (EPC) assessment is split into 2 distinct parts; the assessment of the fabric of the building and how the occupier uses the current building - with a recommendation on how a changed use will save energy. The process is designed to ensure that future occupiers of a house will not be burdened with unrealistic expectations of energy use or savings on their bills.
It has been proposed that Payment for the Green Deal Plan will be in installments collected through the respective energy bill. The on-going billing of the Plan installments would need to be kept up to date and transparent to the energy bill payer. Green Deal plans can last up to 25 years or the lifetime of the product installed. It is worth noting that all window designs and make ups will be covered by Green Deal but they must meet with The Golden Rule.
Based on the findings of the Green Deal Assessment, the Green Deal provider will make a finance offer based on an assessment of the estimated savings that will result from the measures, if installed, and their likely costs for the installation work including finance costs. This is what the Government is calling “the Golden Rule”. The cost of the work must be less than the expected savings over the length of the Green Deal plan.
So what’s the catch?
The short answer is that there is no catch! However, the scheme is not yet in place and will not be fully operational until the autumn of 2012. The key feature that will make the Green Deal attractive to homeowners who are unwilling or unable to pay for the energy saving measure themselves is that it is a buy now pay later scheme, open to all and will feature affordable repayments over a long period. The fact that the loan is attached to the property not the individual may make it attractive to some. However as yet, it is unclear how potential purchasers will view a property burdened with an outstanding debt held on it and the resultant higher utility bills repaying the ‘Green Deal Loan’.