Green Deal : An Innovative Finance Mechanism for Energy Efficiency Improvement

The Green Deal is an innovative financing mechanism that lets people pay for energy-efficiency improvements through savings on their energy bills. 

How the Green Deal works  

The Green Deal process has four stages:

Assessment 

This is carried out in your home or business premises by a Green Deal Advisor or Assessor. They will:

• use standardised software to identify what energy efficiency or microgeneration improvements you can make and what the financial savings would be
• outline how the payments will work
• identify which improvements are likely to be cost effective
• produce a Green Deal advice report outlining your options
• declare any links they have with Green Deal Providers. 

Finance

Once the Green Deal Advisor has given you your report, you can take it to one or more Green Deal Providers who can arrange and fund the improvements. If you decide to take up a Green Deal offer you will then sign a Green Deal Plan, which is a contract between you and the Green Deal Provider.

Installation

The Green Deal Provider will arrange for a Green Deal installer to come and carry out the work you have agreed to. The installer will have been vetted to ensure they meet the standards set out for the Green Deal. 

Repayment 

You pay back the cost of the improvements over time through your electricity bill. Your electricity supplier will pass your payments on to your Green Deal Provider. The amount you pay back will be no more than a typical household will save on heating bills, so you are likely to be better off overall from day one.

Although the cost of the improvements is repaid, this is not a conventional personal loan as the charge is attached to the electricity meter in your house and paid back through your electricity bill. If you move out, the new occupant will pick up the charge while also benefiting from a more energy-efficient property.

Interest will be charged on these payments, but the rate will be fixed and you will be shown a full schedule of all the payments before you sign up to the plan. It is up to the Green Deal Providers to decide on the interest rate, so it will be worth shopping around to find the best deal. You will be able to pay off the plan early if you choose, though the Provider may charge a fee for this.

Details of the Green Deal

What improvements will the Green Deal cover?

There are 45 measures or areas of home improvement approved to receive funding under the Green Deal, covering:

• insulation
• heating and hot water
• glazing
• microgeneration (generating your own energy).

For the non-domestic sector lighting, mechanical ventilation and heat recovery measures can also be covered. More areas may be added as technology develops.  

Incentives to kick-start the Green Deal

 The Government have recently launched the Green Deal Cashback Scheme, an incentive to encourage people to make improvements during the early days of the Green Deal. Eligible customers will receive cashback payments once they have measures installed, with the highest rates going to the earliest applicants.