Green Deal launches
29th January 2013

The government's flagship Green Deal programme to transform the energy efficiency of the UK's building stock officially launched on Monday , promising to allow households and businesses to undertake wide-ranging property improvements at no upfront cost.

But businesses have warned the scheme will have to overcome a series of teething problems if it is to have the transformational impact ministers are predicting.
Energy and climate change secretary Ed Davey last week promised the "world first" programme would provide a major boost to both the UK economy and its emission reduction efforts by tackling the 38 per cent of national emissions attributed to draughty buildings.

The scheme enables property owners and tenants to install a selection of 45 energy efficiency measures, including small-scale renewable energy generation technologies, heat pumps, energy efficient boilers and insulation, all at no upfront cost.
The cost of the work will then be repaid through financing packages, the bulk of which are expected to be provided by the new non-profit Green Deal Finance Company (GDFC), which will levy a small additional charge on energy bills.
Crucially, these packages are attached to the property, so payments will be taken on by any subsequent occupiers who benefit from the resulting energy bill savings.
Moreover, the 'golden rule' governing the scheme is meant to ensure repayments cannot be higher than the expected energy savings, meaning households and businesses taking out Green Deal packages should be better off.

Early adopters can also claim cashback payments worth up to £650 for solid wall insulation, and £100 for loft insulation. Customers fitting a suite of improvements could claim more than £1,000, although they will have to hurry as initially only £41m has been set aside for the cashback scheme.

Meanwhile, a £1.3bn Energy Company Obligation (ECO) scheme will be launched alongside the Green Deal, mandating the Big Six utilities to fund a range of improvements for fuel-poor households.
Ministers argue the Green Deal offers an attractive proposition to households and small businesses and will this week launch a major marketing campaign to promote the scheme.

However, green groups and some industry figures remain concerned about the reach of the scheme and are questioning whether it will be able to attract significant numbers of people to sign up.

Chief among critics' concerns is the high interest rate for loans, which the Green Deal Finance Company confirmed on Friday will range from 7.67 per cent for a 25-year loan to 7.96 per cent for a 10-year loan.
It is possible that households will end up paying twice the amount of the initial loan in repayments, potentially deterring many people from taking up Green Deal packages. Moreover, should energy prices buck current trends and start to fall, the payments may contravene the golden rule by eventually outweighing savings.

Alan Milstein, chairman of the Residential Property Surveyors Association (RPSA), said many customers could consider funding new measures themselves or find other sources of finance, which may prove more cost-effective.
"With early repayment penalties and the uncertainty surrounding how having a Green Deal loan attached to your property will impact on the future saleability of the property, for many homeowners it may be advisable to look at alternative ways to fund any energy efficiency measures they plan to introduce," he said.
Critics have also warned that current low levels of public awareness of the scheme will undermine its success. Few people have signed up for improvements since the Green Deal's so-called 'soft' launch in October and a survey last week revealed four out of five people have not heard of the scheme – although two thirds of people polled said they wanted to make their home more energy efficient.
The government maintains a £3m advertising campaign – featuring the tag-line 'Hate rising energy costs? Green Deal with it!' – will drive uptake and help ensure people start to consider undertaking energy efficiency improvements. Climate change minister Greg Barker said last week the aim is for the Green Deal to change the perception of home improvements provided by "a man in a brown boiler suit... [to interior designer] Linda Barker".
"We're thinking energy efficiency is going to be the new scatter cushion and [the Green Deal] is going to transform the way people feel about what today [is regarded as] a relatively boring issue," he added.
The government is also hopeful the scheme will help drive economic growth. So far, 24 installers have been accredited to conduct surveys and installations, and a further 40 are expected to be confirmed over the next few days as the number of firms offering Green Deal services expands.