Post date: Monday, 28th January 2013

Green Deal launches with cashback offer

 
external wall insulation

External wall insulation being installed on social housing. It makes sense, but will be Green Deal support it?

The government's programme of retrofitting homes in England and Wales for energy efficiency finally launches today, backed by financial muscle to minimise the cost to those taking out the offer. A separate scheme is working in Scotland.

A £125m Green Deal Cashback Scheme is intended to attract interest to the first households who decide to install energy-saving measures under the scheme. The more work households decide to have done, the more cash they could receive.

A comprehensive list of potential improvements is supported under the Green Deal, such as insulation, draught proofing, double glazing, heating and renewable energy technologies, are listed on the Energy Saving Trust website.

The first step for those potentially interested is to choose from the list of assessing organisations and providers on the Green Deal Orb website, and receive an assessment and proposal.

The government believes that local councils and community groups will be key to making the scheme a success by being able to target the homes which most need the alterations. To this end they are publishing a toolkit, produced by the Centre for Sustainable Energy, which they can adapt for their purposes.

Simon Roberts, chief executive of the Centre for Sustainable Energy, said: “The Green Deal will succeed where people understand it and feel like it’s something for people like them in homes like theirs".

Ann Robinson, director of consumer policy at uSwitch.com, said: “The Green Deal has the potential to help consumers afford energy against a backdrop of escalating fuel bills. Our surveys tell us that many people simply do not know how to make their homes more energy efficient. They also need assurance about the quality of any work done, and help with funding."

Yet the scheme faces many criticisms, chief amongst which is that the rate of interest decided for the loan repayments is too high to make the scheme of interest in the majority of cases.

The loans are repaid from savings on the property's electricity bills, and the predicted returns are based on the property's bill levels over the previous two or three years. This is despite the fact that most savings are likely to be on heating bills.

Not only is this interest rate 6.96%, a rate higher than may be found elsewhere, but there are both an initial and a yearly administration charge set by the Green Deal Finance Company which is managing the financial side of the scheme.

Such a high level of cost was signalled over a year ago as being potentially off-putting to consumers, with comparisons being made to a similar scheme in Germany, where the interest rate is just 2% and take-up is wide, and to the Student Loans Company, which also offers a low interest rate.

While simple measures like installing loft insulation could have a payback of between two and three years, and be covered by the Green Deal, others, such as solid wall insulation, which costs up to £8,500 according to the Energy Saving Trust, are unlikely to be covered, yet ultimately must be carried out in order for the country to meet its energy-saving targets and to reduce fuel bills.

Government hopes to tackle a noted general lack of awareness of the scheme across the country with the cooperation of businesses, who are being encouraged to promote the Green Deal with specially prepared material, such as posters and leaflets, using the slogan "Green Deal With It".

Many industry bodies have been lobbying the government with suggestions to make improvements to the scheme, that have been ignored.

Earlier this month, the British Property Federation, Chartered Institute of Building, Home Builders Federation, Timber Trade Federation, and Green Building Council wrote to the Chancellor, George Osborne, especially asking him to reconsider elements of the ‘consequential improvements’ policy which had been abandoned by Communities Secretary Eric Pickles the previous month.

Also on their five point list of requests was to let the Green Investment Bank borrow, extend Display Energy Certificates to all buildings and phasing out the letting of poor performing buildings. “Our members of course welcome a reduction in burdensome regulation, but it is vital to distinguish between unnecessary red tape, and smart regulation that can provide clear direction as the basis for industry investment, innovation and growth," concluded the letter.

Nonetheless, the industry does see this as an opportunity. Neil Schofield, head of external and governmental affairs Worcester Bosch Group, said: “Certainly for the heating industry, the Green Deal has become the ‘main show in town’ and this is now a massive opportunity for us to make it a success. For the boiler industry alone approximately 5,000 installations take place on a daily basis, so the opportunity for the industry to enhance the collective heating efficiency of UK homes is clear to see."

It is now up to all parties to push the scheme and see if it can meet the same level of success as the Feed-In Tariffs for solar electric panels, which was so successful that the level of the financial return had to be reduced.

Story: David Thorpe, News Editorf

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