The Energy Bill  introduced to Parliament on 8 December 2010 includes provision for the new ‘Green Deal’, which is intended to revolutionise the energy efficiency of British properties.

“The Green Deal will be the biggest home improvement programme since the Second World War” – Greg Barker, Minister of State.

 The Green Deal is a new initiative implemented by the Government to facilitate the retro fitting of energy saving measures to millions of homes across the UK by accredited organisations. It has been designed to revolutionise the energy efficiency of properties throughout the UK.

Under the scheme, households and businesses will be able to improve the energy efficiency of their properties by taking out loans to have their properties made more energy efficient. Householders and businesses would pay back the loan over the course of 25 years through the savings made on their energy bills. Should people move from their home, the charge will remain with the property and because the finance will be tied to the energy meter rather than the householder, it means that credit ratings won’t be an issue when it comes to qualifying.

A framework will be established which will allow energy efficiency improvements including energy efficient boiler replacement, cavity wall insulation, double glazing and loft insulation to their homes, community spaces and businesses at no upfront cost. Private companies will be drafted in to finance the up-front cost of the installation and will recoup their cost through the savings made by the resulting reduction in household energy bills. A proportion of that saving will also be passed on to the house holder.

Customers will be able to choose from 23 different technologies, which include cavity wall insulation and draughtproofing. It may also cover the costs of solar water heating, wood-burning stoves and biomass boilers.

What does The Green Deal propose?

The Green Deal sets out various proposal prerequisites, including:

- The expected financial savings must be equal to or greater than the costs attached to the energy bill, known as “the golden rule” of The Green Deal.

- The measures must be approved and the claimed bill savings must be those accredited through this process.

- The measures installed must have been recommended for that property by an accredited organisation who has carried out an assessment.

- The measures must be installed by an accredited installer.

- For households, The Green Deal provider must give appropriate advice within the terms of the Consumer Credit Act, and must take account of the individual circumstance of the applicant.

- The Green Deal Provider must have consent from the relevant parties, including the express consent of the current energy bill payer.

- The presence of a Green Deal must be properly disclosed to subsequent bill payers (new owners and tenants) alongside energy performance information.

- Energy suppliers must collect The Green Deal charge and pass it on within the existing regulatory safeguards for collecting energy bill payments – including protections for vulnerable consumers.

The Golden Rule:

It is very likely that this is the Golden Rule that will apply:

  1. the instalment payment for energy saving measures must not exceed the potential associated cost savings for the property based on an average bill for the duration of the Green Deal.

  1. to ensure that households who are less able to take advantage of Green Deal finance can still be supported and can improve their homes

  1. vulnerable households on low incomes, as well as those in properties that are more difficult to treat, will be a key focus of the scheme.

However, the current consultation papers still need to be finalised at the Energy Bill’s House of Commons Committee Stage.