Green Deal raises hopes for energy
efficiency revolution
2nd October 2012

The government's Green Deal energy efficiency scheme launched officially on Monday, offering households and business the chance to sign up to Green Deal services that will provide energy efficiency makeovers at no upfront cost.

Under the phased introduction of the scheme, the legal framework for the Green Deal comes into effect from October, before customers can then sign up to Green Deal financing packages from January 28 next year, allowing them to pay for the work through a levy on their energy bills.

The scheme is designed to ensure repayments are lower than the energy bill savings that result from the efficiency improvements – a concept known as the "golden rule", which should ensure customers benefit financially from taking out Green Deal packages.

According to the government, the scheme is expected to deliver energy efficiency and heating measures worth an estimated £1.3bn, with up to 15 million homes eligible for the new services.

"The Green Deal will empower consumers by giving them new ways of funding home improvements, and empower businesses by enabling them to compete for energy efficiency opportunities in new and innovative ways," said a spokesman for the Department of Energy and Climate Change (DECC). "It will boost the low carbon economy by supporting up to 60,000 jobs in the insulation sector alone by 2015, up from around 26,000 today.

"The Green Deal could see British homes and businesses save enough energy to power 1 million homes in 2020."
The scheme will initially be focused at domestic customers, but some Green Deal providers are also preparing to develop services under the scheme that target business customers.

Significant numbers of firms, particularly in the property sector, will be keeping a close eye on the first few months of the scheme and are actively considering using the Green Deal to finance energy efficiency improvements for their properties.

"We are seeing clients who are interested in taking up Green Deal services and there will be a lot of interest in the launch," David Symons, director at consultancy WSP Environment and Energy,said. "There's more focus on the residential sector, but there are companies that are looking at it closely, particularly property companies that have mixed developments with residential and commercial property."

He added that the Green Deal would have to demonstrate that the interest rates on offer are attractive enough to drive uptake and predicted that promised incentives and marketing from the government would have to be well structured to ensure strong early adoption of the scheme.

The government is in the process of delivering up to £200m of incentives to help drive early adoption of the scheme, including a recently announced £12m to support Green Deal pilot projects in seven cities across the UK. However, industry sources are continuing to call for more clarity on how the £200m will be spent and what incentives will be offered to early adopters of Green Deal services.

In addition to businesses benefiting from potentially taking up Green Deal services, the government is predicting that the scheme will represent a multi-million pound opportunity for the energy efficiency and microgeneration sectors as demand for green technologies and building services grows.

Dave Sowden of the Microgeneration Council said the scheme made "complete economic sense" and represented a "very significant opportunity" for the energy efficiency, heating technology, and microgeneration sectors.

"Energy efficiency and microgeneration are joined at the hip," he explained. "They are targeting the same customers with the same lead generation model, so the Green Deal is a great opportunity to make the case for these improvements to customers."

However, Sowden also echoed widespread concerns that the introduction of the scheme could lead to a reduction in the rate of deployment of some energy efficiency improvements as existing funding schemes are phased out.

"The Green Deal is the right thing to do, but the potential problem lies in the transition between the current regime and the new scheme," he said. "The government has got to manage the next few months really carefully to ensure demand for energy efficiency does not fall off a cliff as some experts have warned. If that happens it will be very difficult to ensure the market recovers quickly enough to make the scheme a success."

It is a concern echoed today by consumer group Which?, after it launched a new online advice guide designed to help households interested in the scheme ensure they get the best deal from new Green Deal providers.