Many of you will already have heard of the Green Deal but will not clear exactly what it is and why the government is introducing it.

Britain has some of the oldest building stock in Europe. Many of us live in draughty, poorly insulated homes. Consumers pay a high price for this in terms of energy bills and so does the planet. A quarter of UK’s carbon emissions result from heating our homes and a similar amount from businesses.

The Green Deal will mean that energy bill payers will be able to get energy efficiency measures without having to pay cash up front. Businesses will provide the capital getting their money back from a charge on the energy bill.

The golden rule is that estimated savings on bills will always be equal or greater than the cost of the work.

Millions of homes and businesses could benefit from improvements under the green deal. Both owner–occupiers and tenants can get the benefits of better energy efficiency. There will be extra help for the most vulnerable, those on low incomes and those with hard to treat homes.

The Green Deal is also a big opportunity for businesses. Retailers, tradespeople, energy companies and investors will have access to a new growing market. Estimates of ‘green jobs’ are between 100,000 and 500,000 over the next 5 years.

The aim will to be make UK homes and businesses more energy efficient and cut our carbon emissions helping us to reach the 2050 emissions reduction target

Why is the green deal needed?

Most of us pay energy bills but after the bill is paid we don’t thnk too much about why our bills are so high.  The more motivated might switch energy suppliers but this will not fix the underlying problem. Unless you live in a house built in the 21st century (which are already very efficient) it is relatively cost effective to make changes that can significantly reduce energy bills.

But most of us have other things to think about and more interesting things to spend our money on. In addition most of us don’t know how long we will stay in our current home so risk losing money if we move soon after investing in energy saving measures.

The aim of the Green Deal is to solve these problems and also give us a nudge in the right direction – helping us to help ourselves. Also don’t delay as energy bills are set to increase even faster in the future.

How will the Green Deal work?

Private firms will offer energy efficiency measures to homes and businesses with no upfront costs – firms will recoup the cost from instalments on the energy bill. The costs will not exceed the saving so bill will either be the same or lower.

Bill payers will see the Green Deal charge alongside the reduction in energy use and savings on their bill.

If you move out and stop paying the bill the green deal loan stays with old property and the new bill payer will continue to pay the green deal costs.

The simple principle is that you pay as you save - so when you stop saving, you stop paying.

Green Deal – stopping the rogue traders

With any new opportunity there are a small number of companies and individual that can be ‘rogue traders.’ This happened in the past with double glazing and Solar panels where unrealistically fast pavback periods were claimed.

These key rules will prevent this abuse

• The Golden rule - The expected financial savings must be equal to or greater than the costs attached to the energy bill
• Measures must be approved - the claimed bill savings must be those applied to the bill
• Accredited Independent Adviser – measures must have been recommended for that property
• Accredited Installer –measures must be installed by an accredited installer
• Consumer credit act – Green Deal providers must give advice according to the CCA and take account of individual circumstances
• Consent gained – consent of the current energy bill payer must be obtained
• Green Deal disclosure – Subsequent bill payers eg new owners or tenants must be made aware of the green deal cost and savings
• Existing Regulatory Safeguards – Energy companies must collect the Green Deal and pass it on within the safeguards - which include protection for the vulnerable

What do I do if the energy savings will not cover costs?

There will be additional help for those who need it most

• Lower income and vulnerable households may not save money through energy efficiency because they cannot afford to have the heating on long enough to heat the home properly.
• These people will enjoy warmer homes but may not see cash savings
• Homes that need major measures which are currently more expensive will need additional support to bring down the cost enough to meet the Golden Rule

External wall insulation is one of these major measures requiring extra help. EWI is typically used for solid wall homes that do not have a cavity eg Victorian houses.

The Green Deal Process

(Source: Department of Energy and Climate Change 10D/996)

What’s in it for me?

Around a quarter of all heat can be lost from a loft – and walls are even worse losing about a third. So the sooner home improvements like insulation are made the sooner you can cut fuel bills.

(Source: Based on CERT information for an average 3 bed semi from DECC leaflet Ref. 10D/973)

Timing

The Green Deal is due to start at the end of 2012

More information

If you want to find out more about the Green Deal please follow this link