What is the Green Deal?
The Green Deal is a new initiative which the Government aims to introduce in the autumn of 2012. Its goal is to “reduce carbon emissions cost effectively by revolutionising the energy efficiency of British properties.”
For full information about the Green Deal go to the Department of the Environment and Climate Change Website.
Below is a precis of how the Green Deal is intended to work.
Householders & businesses will be able to install energy efficiency measures in their properties without the upfront capital cost. They will take out a loan and the repayments on the loan should always be less than the amount saved by the energy saving measure.
Green Deal loans will be attached to the property and the bill payer will pay the loan back through electricity bills for a period of up to 25yrs. Loans can be passed from bill payer to bill payer and any loan will have to be declared to a new owner/tenant before the property is sold or let In the case of rented properties, if the property becomes vacant, then the landlord will become responsible for paying the loan instalments.
Golden rule – cost of loan must be less than estimated savings in energy bills; in addition the loan is not likely to extend beyond the lifetime of the measure (i.e. if a boiler is expected to have a working lifetime of 10yrs then the loan period relating to this would not extend beyond 10yrs).
Energy companies will have to fund certain measures, this is called the Energy Company Obligation (ECO). These measures will support:
The Affordable Warmth Target* – the most vulnerable/low income households in private sector housing. Households that meet certain benefits/age criteria will be eligible to receive ECO grant funding to cover the full cost of energy efficiency measures that allow them to heat their home more affordably.
The Carbon Reduction Target* – more expensive measures in hard to treat homes. Some homes are not able to have cavity wall insulation installed and so would require a more expensive measure, such as solid wall insulation, which is less likely to meet the ‘golden rule’. This element of the ECO would subsidise solid wall insulation to help it meet the golden rule.
The ECO will be funded by a levy on everyone’s energy bills.