Green Deal regarded as proof of Coalition's green credentials

The Guardian reported last week how the UK's Green Deal had begun it's parliamentary journey.

The Green Deal is a new initiative that will deliver energy saving home improvements to homeowners and tenants with no upfront costs - the investment being a mixture of public and private investment from (amongst others) big high street names like M&S, Tesco and B&Q.

Homeowners will pay back the 'loan' via the energy savings the improvement makes, whilst the companies backing the scheme will undoubtedly get some form of carbon credits etc.

As we reported earlier, (see here), The Golden Rule of any energy saving home improvement will be that it must save more money than it costs to install.

Payouts are expected to be capped at around £6000 and there are reports that Landlords could be forced to install green deal measures if asked to do so by their tenants.

The loans will be attached to the property rather than the owner, so anyone buying a property that's had green deal improvement work carried out will take over the loan 'repayment'.

The Government reckon 14m of the 27m homes in the UK would benefit from either loft, cavity or solid wall insulation.

Are there really that many homes without any sort of loft insulation fitted? Maybe I'm lucky but I can't recall knowing anyone who didn't have their loft insulated.

photo credit: robert s donovan

How the Green Deal will work

Reuters ran a very good article on how the UK's Green Deal will work, though an interview between the Energy Minister Greg Barker and Yale Environment 360.

Click here to read the full article for yourself.

I did just want to quote one answer from it though - once the politician had actually stopped spouting 'political speak' and answered the question put to him - namely, how will the Green Deal work?

Here's his answer:

"What we're going to do is go away from the stop-go, government-funded programs, and through using smart regulation, open up this market to the private sector. We believe we can create a market that will bring in billions of pounds of investment into energy efficiency for homes and businesses. We're going to create a mechanism whereby the cost of making these [energy-efficiency] measures can all be financed through pay-as-you-save models, with the finance being repaid over a period of 20 years through the bill on each individual property. Now, that's a big change. To date it had to be paid upfront, either by the individual homeowner or through a grant. By pinning the repayments to the bill of the property, it means it's not a debt. It's not even a mortgage. It doesn't need to be credit-scored, because if the individual living in that particular home moves, dies, ownership changes, or they cease to rent, it stays on the bill of that property, just like the conventional energy bill.

But there's one golden rule: The cost of financing the measures, which would be anything up to 6,000 pounds, must always be less than the savings anticipated from the installations [of energy-efficiency measures]."

So one 'golden rule' and upfront costs paid by private sector finance.

Sounding almost too good to be true.

photo credit: conor lawless