THE GREEN DEAL is an innovative financing mechanism which allows consumers to pay back through their energy bills. This means consumers can see the Green Deal charge alongside the reductions in energy use which generate savings on their bill.
It also means that if they move out and cease to be the bill-payer at that property, the financial obligation doesn’t move with them but moves to the next bill payer: the charge is only paid whilst the benefits are enjoyed. In this way, the Green Deal differs from existing lending – it is not a conventional loan since the bill-payer is not liable for the full capital cost of the measures, only the charges due whilst they are the bill-payer.
The expected financial savings must be equal to or greater than the costs attached to the energy bill. This is known as “the golden rule”. Savings are based on a ‘typical’ household using a standardized method to calculate energy costs of a similar property size and type. Once typical savings are established Green Deal payments are capped at this level. An Occupancy Assessment will be carried out to predict actual savings for the current occupier. This will let the occupier know if their actual savings will be lower or higher than a typical household.
The reason why Green Deal payments are based on ‘typical’ savings rather than actual is because the loan is attached to the property and not the individual. This prevents future occupants having excessively high repayments. Note actual savings cannot be guaranteed because this will depend on the occupants use of energy and future energy costs.
The measures installed must have been recommended for that property by an accredited, objective and impartial Green Deal Advisor who has carried out an assessment. The measures must then be installed by an accredited Green Deal installer.
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 (e.g. new owners or tenants) alongside energy performance information.
Products included in Green Deal
Keeping the heat in
An uninsulated home loses heat through the walls, roof and floors. The first step to an energy efficient home is to reduce this heat loss, through products such as loft and cavity wall insulation. Keeping the heat in means you need to use less energy to keep your home warm saving you money. Here is a list of products helping you keep the heat in.
o Cavity wall insulation.
o Draught proofing.
o Duct insulation.
o External wall insulation.
o High performance external doors.
o Internal wall insulation.
o Loft or rafter insulation.
o Mechanical ventilation with heat recovery.
o Pipe-work insulation.
o Replacement glazing.
o Roof insulation.
o Room in roof insulation.
o Sealing improvements (including duct sealing).
o Secondary glazing.
o Under-floor insulation.
Green Deal Cashback Scheme
The Government announced a cash back incentive scheme that will be available from 28 January 2013 for homes in England and Wales. It will encourage households to become the first to take up the Green Deal. For people living in Scotland there will be a separate incentive scheme details of which are yet to be confirmed,
What is the cash back incentive scheme?
Householders including tenants should be able to claim cash back for different energy efficient improvements that they install providing the improvements have been recommended by a Green Deal Assessment and installed by a Green Deal Provider. The improvements can be funded by a Green Deal Plan or by financing it through other methods.
What more do I need to know?
One cash back offer per household, but this can cover a range of improvements but must be claimed at the same time.
The government is setting aside £125m for this scheme; the rates are guaranteed until the first £40m is spent and then the rates may reduce.
You’ll need to have a Green Deal Assessment and install some or all of the measures recommended. The installation work must be completed by a Green Dealapproved installer.
To claim the cash back you need to pay towards some of the cost of the improvements and the cash back will be capped at 50% of the installation costs. Householders receiving improvements installed free (such as free insulation) will not be eligible for cash back.
You’ll be able to donate some or all of your cash back to registered charities and Community Interest Companies.
Improvements must be completed within a certain amount of time yet to be specified but in all cases before 31 March 2014.
The Government have published a list of improvements that are likely to be part of the cash back incentive scheme. Householders can choose from any of the products that are recommended following the Green Deal Assessment. If your Green Deal Advice Report recommends either loft insulation (including top up) or cavity wall insulation or both then these must be installed alongside the other improvements you choose to be able to get the cash back.