Green Deal

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Green Deal and ECO

The Green Deal was introduced to help homeowners and businesses pay for energy efficient home improvements over time, through savings on their energy bills.  But for those people in most need, extra help may be available through the Energy Company Obligation (ECO).  The ECO was introduced in January 2013 to help reduce energy consumption in the UK and to help people living in fuel poverty.  It does this by funding energy efficient home improvements worth up to £1.3 billion each year, the money is provided by energy companies………….and there is no catch!  The main objectives are to tackle fuel poverty and reduce harmful emissions at the same time.

When is ECO funding available?

The Electricity and Gas (Energy Companies Obligation) Order 2012 was passed by Parliament in December 2012.  It came into effect in January 2013 and is scheduled to run initially until March 2015.  The ECO will run alongside the Green Deal, with funding provided by energy companies to support the installation of energy efficient home improvements in low income households and in properties which are more difficult to heat.

Affordable Warmth – Better than the boiler scrappage scheme

The Boiler Scrappage Scheme of a few years ago allowed you to get a discount on a new central heating boiler by trading in your old boiler which was consequently scrapped.  In effect, the boiler scrappage scheme merely reduced the cost of having a brand new central heating boiler installed. The Affordable Warmth Scheme offers qualifying homeowners a much better deal than that by providing the mechanisim for a brand new ‘A’ Rated central heating boiler to be installed in their home……completely free of charge.  The Government and the six major energy companies who are funding the Affordable Warmth Scheme expect a much larger take up for this scheme than happened for the boiler scrappage scheme.

Affordable Warmth Scheme – How can Just a Quote help?

Just a Quote has teamed up with a number of accredited installers of energy efficient home improvements throughout the UK who are authorised to install qualifying products using ECO funding.  We can arrange for a surveyor to visit you, free of charge, to establish whether you qualify for the free installation of a new ‘A’ rated energy efficient central heating boiler to replace your inefficient old or faulty central heating boiler. 

What is the Green Deal?

The Government’s Green Deal Initiative has been introduced to help promote the installation of more efficient energy products and insulation materials into the UK housing stock. The whole basis of the Green Deal rests on loans being made available to facilitate this work, which are repaid out of the forecast financial savings in future energy costs, though the corresponding saving in emissions is the real target. We explain the background to the Green Deal, why it has been introduced and how it will work. However, the details of the Green Deal initiative are still evolving, so to obtain the very latest accurate information one of the official Green Deal Advisors should be consulted.

Green Deal and Climate Change

The average temperature of the Earth’s surface has increased by 0.8º centigrade since the beginning of the twentieth century, with over 60% of that increase occurring since the 1970’s. Additionally, more than 30 billion tonnes of carbon dioxide are emitted into the atmosphere each year by burning fossil fuels – and it is argued that carbon dioxide emissions contribute to global warming. However, whether you believe that the world’s climate is changing or not, most western Governments are planning to improve energy efficiency and reduce so-called green-house gases. The Climate Change Act of 2008 legislated for a reduction in the United Kingdom’s carbon emissions and set legally binding carbon budgets throughout all sectors of the economy – domestic, commercial and industrial.

Green Deal Initiative

The Energy Act of 2011 took this one step further with provisions for the new Green Deal which introduces plans to vastly improve the energy efficiency of a wide range of properties in the United Kingdom. To facilitate this, loans are offered to property owners for them to carry out certain home improvements which will increase the energy efficiency of their buildings thus reducing energy costs.  Products for which Green Deal loans are made available include energy efficient replacement windows and doors, biomass boilers and solar thermal water heating systems.

The key to the Green Deal is that the loans will be repaid from savings made as a result of this reduction in energy consumption. In this way, the Green Deal initiative eliminates the need for property owners to pay upfront for their home improvements and it is hoped that this fact alone will stimulate its uptake. The amount of the loan will be limited so that it is capable of being repaid by savings made without further contribution from the property owner. The repayments will be made through energy bills (specifically the electricity bill) which will be reduced by the amount of the saving and then increased by the loan repayment.

The golden rule being that the predicted savings created by improving energy efficiency should be equal to or exceed the repayments. The Green Deal will be available to households and businesses – with plans also to allow communities to work together within one application, for example to externally clad a number of properties so that the local housing stock is not only warmer but also has a uniform appearance.

Energy Company Obligation (ECO)

There may be instances, where although it makes sense to improve the energy efficiency of a property in order to reduce its energy consumption and cost, it is difficult to achieve significantly high savings to pay for the improvements required, that is, where Green Deal finance alone is insufficient. This could be in the case of low income households or in respect of properties which are difficult or expensive to improve, such as those with no cavity in the external wall. For these situations, the new Energy Company Obligation was developed which will place obligations on energy companies requiring them to provide a specific amount of credit for energy efficient home improvements in homes in Great Britain before a set deadline. The intention is that the Energy Company Obligation will integrate seamlessly with Green Deal finance.

Green Deal: What if I move house?

Something of importance to the homeowner who instigates home improvements as part of the Green Deal is that the loan is not a personal loan, nor is it secured to the property. Because the repayments are added to the energy bills for that property, they are the responsibility of the person who is responsible for the energy bills – even if the property changes hands.

Why is the Green Deal required?

Compared with the level of emissions in 1990 the UK is committed to a 34% reduction in CO² emissions by 2020 and at least an 80% reduction by 2050. And according to the Department of Energy and Climate Change, 24% of total UK CO² emissions are generated by domestic housing stock.

There may then be political reasons why the Green Deal initiative was introduced, in order to meet the Government’s targets on reducing carbon emissions but there are also financial issues under consideration. There are approximately 26 million homes in the United Kingdom and it is estimated that around half of them have inefficient energy systems and / or poor insulation. As energy prices rise faster than general inflation it becomes more urgent that homeowners mitigate the effects by installing more energy efficient heating systems and improving insulation. Some heating systems are also in need of replacing because they are downright dangerous and the estimates for spending on healthcare due to cold and damp homes is in danger of reaching £1 billion per year! Just look at some of the quotes made in recent years: –

• The average home fuel bill (gas and electricity) will rise by more than £400 per year to £5,199 in 2019.
(Source – uSwitch, Daily Express, Monday 22nd June 2009)
• “£1 in every £3 spent on household energy is thrown away”.
(Source – Daily Mail, Friday 23rd January 2009)
• HEATSEEKER vans, reporting back to 25 – 30 councils across the UK, are using thermal imaging cameras at night to identify which homes are wasting energy. Some regional councils are considering using this information to assess council tax increases.
(Source – Daily Mail, Friday 23rd January 2009)
• “The Government’s green advisors want to bump up council tax and stamp duty for the 5.5 million homes that are not energy efficient”
(The ‘green’ advisors are the Energy Saving Trust and the UK Green Buildings Council.
Source – News of The World, 23rd August 2009)

The Green Deal provides the opportunity to upgrade and improve Britain’s poor housing stock whilst attempting to reduce carbon emissions. On the face of it, it appears to be a ‘win – win’ situation but the Green Deal initiative has not been without its critics. Claims in the media have included that it will achieve very little whilst being exceptionally expensive, will be open to fraudulent activity and that it will be a bureaucratic nightmare. The Green Deal however, is well into the final stages of development and is due to be introduced in January 2013. For some homeowners it may be the only way they can afford to improve their home and reduce their heating bills. Time will tell.

How does Green Deal work in practice?

The Department of Energy and Climate Change is responsible for overseeing the introduction and management of the Green Deal initiative and as part of the process of setting out how it will operate, an ‘end-to-end’ process map has been drawn up involving nine interested parties and no less than 60 stages. The ‘interested parties’ are: –

  • Consumer (householder)
  • Green Deal Provider
  • Green Deal Financier
  • Green Deal Advisor
  • Green Deal Installer
  • Energy Saving Advice Service
  • Electricity Supplier
  • Landmark Register (EST in Scotland)
  • Credit scoring agency
The Green Deal process can be broken down into four stages – Advice, Finance, Installation and Repayments

1. Advice
The householder requests an initial assessment by a Green Deal Advisor who will consider the current energy performance of the property to assess which, if any, home improvements can be dealt with through the Green Deal. The advisor will also ensure that the energy cost savings will be equal to or greater than the costs of the proposed home improvement installation. A detailed quotation is provided by the advisor showing the cost of the home improvements, how much would be saved in energy costs and how long the costs would take to be repaid. The householder can then solicit other quotations from accredited Green Deal Installers. At the time of compiling this website the maximum amount of the Green Deal loan is set at £10,000 but this may well change prior to implementation.

2. Finance
Once a quotation has been accepted by the householder and approved, financing needs to be organised by the Green Deal Provider and be supplied by the Green Deal Financier. It is the part of the job of the Green Deal Advisor to ensure that the necessary steps are put in place to deal with the loan repayments. These repayments are attached to the property’s energy bills, so if the property is sold the Green Deal repayments remain with the property and continue to be paid to the Electricity Supplier.

3. Installation
Once financing is in place the Green Deal Provider arranges for the installation of the new energy efficient products by an accredited Green Deal Installer, and both that organisation and the householder have to sign these off as being complete and satisfactory.

4. Repayments
Once the installation is complete the Green Deal Provider will oversee payments to the installer, receive fees for his own involvement and arrange repayments of the loan. The Green Deal Provider also has an on-going responsibility to the householder, including any complaints and queries – including those of any future householder if the property is sold.

Which types of home improvements are covered by the Green Deal Initiative?

A wide range of products can be funded through the Green Deal initiative and include products which generate light, heat and cooling more efficiently and those which protect against the loss of energy. One important rule is that they should be fixed to the property and not be portable. The full list of energy efficient home improvement products which can be installed under Green Deal, though subject to change includes the following: –