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The Green Deal explained
The Government's Green Deal scheme has launched, although there is still an awful lot to be finalised. Here's the lowdown on the scheme as it stands.
What is the Green Deal?
Very simply, the Green Deal offers loans to pay for energy insulation measures such as cavity wall and loft insulation, and renewable energy products including solar panels. The repayments for the loan, including interest, will be added to a household’s electricity bills.
However, the whole initiative is built on the premise that the savings a household will make on its energy bills will quickly outweigh the repayments. This has been called the ‘Golden Rule’. There are concerns that installations will struggle to meet this Golden Rule and that a lot of the onus will be on households to radically change their energy habits as well.
How the process works
The first stage is to book an energy assessment. A qualified assessor will spend around two hours looking at the energy efficiency of your home and how you use energy.
They will provide you with an Energy Performance Certificate (EPC), similar to ones you see on appliances such as washing machines and fridge-freezers. This will show your current energy efficiency rating and a potential rating if you made some improvements.
They will also provide a tailored report, which will recommend energy-saving measures you can take yourself and any you could apply for through the Green Deal.
Any improvements that require financing will have to meet the Golden Rule of saving you more over time than they cost to install. This should be set out in the costing.
Who’s offering the Green Deal?
At the time of writing, only British Gas and the Mark Group are offering assessments, with British Gas charging £99. There are likely to be financial incentives for households taking out finance during the early part of the scheme, so it’s worth holding on to see who else signs up.
When will the loans be available?
The finance won’t be available until 28th January 2013.
What will the interest rate be?
This also hasn't been finalised but it's hoped it will be between 6% and 8%. It's likely that individual providers will be able to set their own rates.
What if I want to switch energy supplier?
You can switch energy supplier but only to another supplier that is participating in the Green Deal finance scheme. It’s not clear if the interest rate could change as a result of you switching.
What if I move house?
If you move house before the loan has been paid off then it remains on the bills and has to be paid by the new householder.
You could get free insulation now
While the Green Deal continues to be finalised, you can get free household insulation installed now, particularly if you’re on a low income or benefits.
British Gas and EDF are among the companies still offering free loft and cavity wall insulation, irrespective of whether you’re a customer.
And if you’re on a low income or benefits, you could receive shopping vouchers or cash once the installation is complete.
The Energy Company Obligation for low-income households
The Energy Company Obligation (ECO) requires the 'Big Six' energy companies to provide free energy-saving measures to "low-income and vulnerable households".
This scheme has also launched, but details are sketchy here too.
If you want help with energy saving, call the new, impartial Energy Saving Advice Service on 0300 123 1234 if you live in England, Wales or Northern Ireland. Calls are charged at standard national rates.
If you live in Scotland, call your local Energy Saving Scotland advice centre free on 0800 512 012.
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How to get free cavity wall and loft insulation
