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Reform of the Green Deal

28th February, 2014

Early last year we outlined the new government initiative to improve the energy efficiency of buildings by removing upfront costs – The Green Deal.

The Green Deal forms part of the government’s wider action to help consumers with their energy bills and was formally launched in January 2013 to encourage qualifying energy improvements. However, disappointingly, the take up for the scheme to date has been poor despite, on the face of it, providing an effective and financially beneficial method of improving the energy efficiency of your property with one or a combination of improvements to help you with your energy bills.

The Green Deal is the government’s flagship initiative for improving the energy efficiency of buildings. It creates a new “pay as you save” financing mechanism from accredited Green Deal providers to allow a range of energy efficiency measures (such as loft insulation or heating controls) to be installed in homes and buildings at no upfront cost. An innovative element of the Green Deal is that it includes a mechanism to attach the liability to repay Green Deal financing to a property’s energy bills, and requires energy suppliers to recover the Green Deal payments through the energy bills.

There is no guarantee, but generally you should expect to gain from the Green Deal with no additional net cost.

Changes to the Green Deal were proposed on 2 December 2013, intended to streamline and simplify the Green Deal, including:

for an individual:
• Altering the key principle or “golden rule”, which imposes limits on the amount that can be borrowed under a Green Deal plan.
• Improving the finance arrangements that a Green Deal Finance Company can offer.
• Amending law to make it clear that both landlords and tenants can benefit from the Green Deal.
• Providing a new online tool giving concise advice on the steps which you can take to improve the energy efficiency of your property.
• Producing reports to provide you with clear information on what the Green Deal assessment is telling you.
• Providing details and links to companies who offer the services which you want.
• Encouraging providers to offer a blend of products to ensure that you get the best possible deal.
For a company supplying Green Deal Services:
• Allowing access to Energy Performance Certificates (EPCs) so you can identify which properties will benefit the most from any improvements.
• Extending the list of energy efficiency improvements (measures) available under the Green Deal.
• Trying to find ways of limiting the insurance requirements under the scheme.
• Simplifying finance arrangements.

Some reform of the Green Deal has been expected for some time since it was launched over a year ago due to the very low take up so far. It is suggested that the disappointingly low take up has been due principally to the relatively high interest rates being charged on Green Deal loans.

Concerning the wider package to cut energy bills, as the Energy Minister, Ed Davey, stated in a recent blog, over 90% of the cost of energy bills is out of the government’s control. Therefore, if the government is committed to cutting energy bills, it is left with no real alternative but to look at cutting the cost of the environmental and social policies added to those energy bills.

On 18 February 2014 the cashback scheme was amended for England and Wales to:
• Allow cashback applications for a further 3 months until 30 June 2014.
• Allow households to claim a cash back amounts of up to 2/3 of its Green Deal costs.
• Increase cashback for example:
• Up to £4000 can be claimed for solid wall insulation.
• Up to £1000 can be reclaimed for insulation of attic rooms.
• Up to £650 can be reclaimed for double glazing.

For more information please contact Ruth Bowden on 01244 405403 or email [email protected].

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