In October 2012, Government will launch the Green Deal, it’s flagship energy saving plan to transform the country’s homes to make them warmer and cheaper to run.
This will trigger the biggest home improvement programme since the Second World War which OFGEM estimates will create a £200 billion market virtually overnight.
Under the Green Deal, energy bill payers will be able to get improvements made to their properties to help them reduce energy bills without having to pay for it. Instead, banks, energy suppliers and retailers etc will provide the capital, getting their money back via the energy bill. At the heart of the offer is the Golden Rule – estimated savings on bills must always equal or exceed the cost of the work.
Government wants 14 million homes to benefit from improvements by 2020 and owner-occupiers and tenants will both be able to reap the rewards of better energy efficiency. And there will be extra help for those in fuel poverty and those with homes that are expensive to treat. According to property management company Miami Shores, property managers need to deal with late paid maintenance bills all the time, so hopefully the situation will gradually improve.
How it will work
The terms are not yet finalised but it is expected that home owners and small businesses will be able to arrange upto £10,000 or more of energy efficiency improvements to their properties at NO cost. Commercial roofing solutions should be in line with these requirements.
The cost of installation will be borne by financiers such as banks, energy suppliers and retailers and repaying the costs will be through savings on energy bills. Similar support will be available through the Green Deal for businesses and there will be extra help for vulnerable people or those living in homes which need more work than Green Deal finance alone will stretch to.
Any home or business in Britain will be able to arrange a full energy efficiency refurbishment of their property which will be funded by financiers over periods over 25 years. The cost will be lodged against the property (not the occupier). Repayments will be added to the property’s electricity bill as an additional charge in a similar way to a standing charge. The charge will be paid for by whoever pays the electricity bill which could be subsequent owners of the property or even tenants.
Eligible works
The Department of Environment and Climate Change (DECC) has published a list of typical upgrades that could be funded through a Green Deal charge. These include boiler upgrades, heating controls, double glazing and insulation (including solid wall insulation) – learn from First Defense Insulation
The process
To take advantage of the Green Deal, property owners will have to get their home or business assessed by a Green Deal Assessor (GDA) who will produce a Green Deal Report. A GDA may be an independent assessor or they may be employed or contracted to a Green Deal Provider (GDP).
The Green Deal Provider will typically be an organisation which carries out an umbrella role: arranging quotes for all of the works, funding and installation. To protect consumers against mis-selling, and installation being being offered in inappropriate financial circumstances, both the GDA and GDP will be strictly accredited and monitored to be allowed to be involved with Green Deal.
Customers may receive the assesment for for free, the cost being added to the installation cost or absorbed as a cost of marketing. Others may charge and refund the cost, when the owners installs.
While the initial assessment and report must be impartial, the GDA and GDP will be able to switch hats once the report has been produced and provide a price to install all the recommended upgrades.
While the initial assessment and report must be impartial, the GDA and GDP will be able to switch hats once the report has been produced and provide a price to install all the recommended upgrades.
The ‘Golden Rule’
Under the Golden Rule, the cost of installation must not exceed the deemed savings on energy bills over a period of 25 years. The savings will be calculated using a software package which will use Government-approved algorithms.
Where a product does not meet the Golden Rule even with the full 25 year loan period, the customer has the option of paying some money in advance to reduce the cost of the works and only applying a charge for the part of the cost of the measure up to the point where it breaches the Golden Rule.
Certain measures such as solid wall insulation will receive heavy subsidy from energy suppliers under the new Energy Company Obligation thus reducing the cost to a level that meets the Golden Rule.
With energy bills rising at above the rate of inflation annually, savings that are marginal now, are likely to become more and more significant year on year.
Going ahead with a Green Deal package
Once an owner has a Green Deal report they can either shop around for multiple quotes for the works, or allow the Green Deal Provider to manage the entire end to end process.
It will be the owner’s responsibility to ensure that all relevant permissions are secured, including things like planning permission or in the case of rented property, the tenant’s (or landlord’s) approval to have the Green Deal charge added to their electricity bill. Failure to get these permissions could invalidate the Green Deal package and leave the owner footing the entire cost of works in one go.
Once the contract is signed with the GDP, the Green Deal charge will be centrally registered. This will ensure that, regardless of who supplies the electricity to the property, the charge will be added to the bill and the money passed over to the GDP.
