Is the Green Deal Still Struggling with the Golden Rule?

The Green Deal was initially introduced by the Government to help people get access to renewable technologies without having to make the upfront financial investment. It worked like this: You got a green deal assessment that took a look at your property and made suggestions about what you could do to improve energy efficiency. Technically this could be anything from loft insulation to the installation of a heat pump or solar panel array.

The assessment compared the cost of installing a particular technology with the potential savings on fuel bills. The way it was supposed to work to benefit homeowners is that the cost of setting up was offset against the estimated saving and you paid back through your energy bill. In other words, you didn’t benefit from the fuel savings until you had paid off the cost of installation.

On the whole, this worked pretty well with smaller installations but there was a problem with larger, more costly ones. In 2011 the Micropower Council expressed disappointment over the Government’s new Green Deal proposal stating that it was unclear how more advanced technologies could be successfully integrated and how offers such as the Feed in Tariff and Renewable Heat Incentive would be incorporated, providing a better deal and more access for consumers.

The problem, according to some, lay in the ‘golden rule’. Essentially that meant the cost of installation had to be covered by the savings on your electricity or heating bill. That meant there needed to be enough of a saving in your bill to cover the repayments, something which was not possible with projects that could cost in excess of £5,000 to install.

There were many who believed that the Green Deal should be focussed entirely on low cost options such as insulation rather than technologies such as heat pumps, double glazing and new boilers that could take in the region of 10 to 25 years to payback through energy bill savings.

Installers had urged the government to let customers use the Feed in Tariff and Renewable Heat Incentive profits to pay back on the ‘loan’ for higher cost projects but the worry was that this would lead to the scheme being more popular – it might seem counterintuitive if you are trying to promote renewables in the home but there is a limited pot of money for paying tariffs and incentives.

According to the Chief Execuitive of Micropower Council, David Sowden at the time: “It is potentially a huge missed opportunity as incorporating microgeneration in the Green Deal could really help to drive uptake while maximising reductions in energy bills and emissions.”

So has anything changed as we head into 2015? The answer is yes and no. At the beginning of 2014 the Government was considering scrapping the golden rule altogether especially since industry insiders were complaining that the high interest rates from the The Green Deal Finance Company was making it difficult for installers to deliver under the current guidelines. The areas where the Green Deal applies have shrunk since 2011 with little mention of installations such as solar or other higher tech, higher cost projects.

According to the Telegraph, however, another problem is the low take up of the Green Deal among average householders. Only 2% of those who undertook a Green Deal Assessment actually entered into an agreement, a worrying figure if you are expecting to encourage the nation’s householders to take up green technologies on a large scale.

The other problem is that the Government keeps making pots of money available for projects (normally on a quarterly basis) but these are exhausted almost immediately, leaving many consumers waiting on more finances to be made available before anything can begin. According to Which? concerning the recent December scheme: “Originally, a maximum of £5,600 was made available per household and you could claim up to £4,000 towards solid wall insulation. But that allowance ran out just one day after the scheme went live.”

Choosing a Green Deal Assessor

There’s no doubt if you are looking to install a suitable green technology to improve the energy efficiency of your home, the Green Deal loan provides a way of offsetting all or part of that cost through payments on your fuel bills.

And there are plenty of companies hoping to help you take advantage of the scheme, though there was a recent warning from the Citizen’s Advice Bureau that scammers are taking advantage of it to make some easy money. A number of fake companies are offering Green Deal Assessments at a cost of around £100 to £500 without any intention of providing the service. To make sure you don’t fall prey to this kind of scam you can check out if the person contacting you is registered as a Green Deal provider or installer here.

For those who want to benefit from the installation of solar or heat recovery technology there are now a number of ways that finance can be raised and a chance to make a decent return on investment through initiatives such as the Feed in Tariff and Renewable Heat Incentive. Find out more here.

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