Can the Green Deal make energy efficiency the next big thing in home improvement?
- 24 Jan 2013, 15:00
- Robin Webster
The government is due to launch its flagship energy
efficiency scheme, the Green Deal, on Monday. At a press conference
yesterday, climate change minister Greg Barker insisted that the
programme will make energy efficiency measures the next big thing
in home improvement. But others seem less than enthusiastic. We
cast an appraising eye over the government's big green
The Green Deal is basically a loan scheme. It will
allow householders to take out a loan from the government to fund
measures to improve the energy efficiency of their home -
these could include double glazing, an upgraded boiler, or cavity
wall insulation. The works will be delivered by registered
suppliers and the householder pays the loan off through a surcharge
on their energy bill.
There appear to be some teething problems the media
has picked up on in recent weeks, and here we take a look at
1. Consumer awareness
Householders have been able to sign up for the scheme
since last October, but takeup has been slow. This morning, the
Telegraph claims just
five households - or maybe
two - have signed up to the deal so
far. But that's a step up from in October when it reported
none had done so.
It appears that consumer awareness of the scheme is
not high. According to a YouGov poll for consumer group uSwitch yesterday,
four out of five people have never
heard of it.
The Department of Energy and Climate Change (DECC)
argues it has yet to launch its £3 million communications campaign
for the scheme. At the press conference yesterday, ministers
emphasised that they're expecting the Green Deal could take
"decades" to reach its full potential - so it will be a long haul.
But the media has been critical of such a low key launch,
suggesting that the ambition of the scheme may have been
The uSwitch poll does contains some good news for the
government. According to its press release (unfortunately uSwitch
declined to share a copy of its polling results), 67 per cent of
respondents were interested in "making [their] home more energy
efficient" and 61 per cent expressed an interest in the Green Deal
once the scheme was briefly explained. These results were
less widely reported,
2. The financing: A £10,000
The government has promised that a household's energy
bill will not go up overall as a result of taking out a loan - the
golden rule. Installers must, in
theory, ensure savings from installing the efficiency measures will
equal or surpass the amount spent on them.
Daily Mail reports householders "can
take out a £10,000 loan to make energy efficiency changes". But
this is an upper limit, not a fixed amount. With a range of options on offer, presumably only the really
keen will choose to borrow £10,000.
It adds that because the "£10,000 debt is tied
to the home" - not the individual who takes it out - it could make
a property harder to sell. This is an argument the
Telegraph also makes. A DECC official
said mortgage lenders have been supportive of the scheme, although
how that affects homebuyers' views on it presumably remains to be
Telegraph, shadow energy and
climate change secretary, Luciana Berger claims that consumers may
be put off the scheme by having to pay back the money loaned under
the scheme at an interest rate of "around 6.9 per cent".
A spokesperson from the Department for Energy and
Climate Change (DECC) told us that 6.9 per cent is the expected
rate - not yet confirmed - at which the government will lend money
to the new Green Deal Finance Company (TGDFC), which then makes
some of the Green Deal loans to consumers.
DECC argues that this doesn't necessarily mean that
consumers will have to pay the money back to TGDFC at the same
interest rate. It also claims consumers will also be able to "shop
around to get the best deal", not necessarily borrowing from TGDFC.
Make of that what you will. The most important part of the
equation, DECC says, is the golden rule, which still should mean
consumers pay no more on their bills than they did before they
installed the measures.
There's also a £120 fee for an initial assessment by
a Green Deal advisor on households' efficiency needs. The Telegraph
says this could put households off - especially poorer
3. Intrusion and
It's fairly well known in the energy policy world
modelling says about the benefits of
reducing energy consumption, there are social barriers. It means
upheaval and can involve strangers tramping around the loft. In
addition, as the
Telegraph reports today, the Green Deal
includes some assessment of a householder's income - which some
might find intrusive.
The government says it's trying to address customer
concerns, at least about how trustworthy the people invading the
loft will be. DECC has created a special
certification body, which assesses
whether companies can be Green Deal advisors or installers, an ombudsman to resolve complaints about Green
Deal suppliers, and a
code of practice. Ministers also said
advice line for consumers.
It needs to work
Getting the Green Deal up and running is clearly an
epic task. The complications around financing the scheme, and the
challenge of upgrading the UK's leaky housing stock are
Ministers talk confidently of a programme that is
going to run in the long-term, providing businesses with the
certainty they need to spend money training staff. The media,
meanwhile, appear to be on the lookout for holes in the scheme.
Any such faults could have a big impact on consumer
energy bills. As DECC's website outlines, the department projects
that its energy efficiency policies will bring down consumer bills
relative to what they would have been if the measures weren't in
But that depends on the Green Deal being a success.
For the government, the Green Deal is a crucial part of the
argument that policies will protect consumers from energy bill
price hikes. But no takeup would mean no limiting effect on energy
bills. We'll wait and see.