The Green Deal – The Energy Efficiency Scheme launched by the British Government

Background

The United Kingdom has set itself the target of reducing carbon emissions by 80% by 2050 (A, p.4). Within this context the UK will have 85% of its current housing stock in 2050 and there is a need to improve the energy efficiency of these homes in the face of rising energy costs (A, p.4). Emissions from buildings account for “43% of the UK’s total greenhouse gas emissions” (B) and fuel poverty, where a household have to spend over 10% of their income on energy for heating, is emerging as a pressing social issue with over five million households currently affected (C, p.5). In light of these issues the UK government has launched a scheme called the ‘Green Deal’ with the aim of helping households increase the energy efficiency of their homes and save money “under which 14m homes could be fitted with insulation and other energy-saving measures” (D). The scheme is also expected to create new jobs across the supply chain with government estimates that it could create “65,000 new jobs” (D).

How the Green Deal Works

The scheme, which was launched this year, (E) works by providing households and businesses with loans that are attached to the property which they can pay back as part of their energy bills to make energy-saving improvements to their property such as insulation, double glazing or renewable technology installations (F). Firstly, a household or business would get a property assessment from a ‘Green Deal advisor’ to see what  improvements might be suitable and how much they could reduce their energy bills by (F). If they would like  to  proceed they could then choose a ‘Green Deal provider’ to undertake the work signing a ‘Green Deal Plan’,  a  contract between the household or business and the provider stating what work is to be carried out and the  cost (F). The provider then arranges for a ‘Green Deal installer’ to undertake the work (F). When this is  complete  the cost of the installation is repaid via the energy bill of the individual or business in  installments (F). Provision has also been made through an ‘Energy Company Obligation’ to provide some measures that are  deemed ‘hard to treat’ such as solid wall insulation at no cost to the home owner and to provide assistance  to  disadvantaged groups (G). The Renewable Energy Institute has teamed up with leading university lecturers to lay down opportunities for  professionals and organisations. These are presented and discussed on the Green Deal training course.

Concerns about the scheme

Since the scheme was launched there has been widespread uptake, with large scale installers becoming accredited and people taking up the scheme but there have been concerns about the scale of uptake and whether the scheme is capable of reducing energy bills on the scale desired by government. The scheme has received treasury and government support with £200 million allocated in incentives to encourage uptake of the scheme (H) but there are concerns about whether the scheme will receive sufficient uptake (I). An upfront charge of  up to £150 is required to assess a home for potential Green Deal installations which has been argued is likely to put customers off the scheme (J). In addition to this there are concerns about the level of public awareness about the scheme with a ‘YouGov poll’ showing 4 out of 5 people to be unaware of the programme days prior to its launch (K) and concerns that interest rates of 7% on loans are too high for wide scale adoption of the scheme (L).

Future Prospects

There do appear to be practical concerns with the scheme and administrative issues to address to increase uptake and develop it to its full potential(M). Concerns about the level of uptake of the scheme and rates of installation of certain features do also appear to have merit. For example, the number of households installing cavity wall installation fell from almost 40,000 in April 2012 compared to 1,138 households in April this year, with 47,000 required monthly until 2020 to meet energy reduction targets (N). However, I think it would be premature to write off such a large scale scheme with government backing which has the very necessary and laudable aims of reducing fuel poverty and a large source of carbon emissions. Any scheme of this scale and complexity will take time to fully develop a head of steam and it may yet well lead to widespread public acceptance of the scheme.

Opportunities for Individuals and Companies

With government support of the scheme financially and politically and a large potential market of customers there are a range of opportunities for companies and individuals both as consumers and commercially at a number of stages in the supply chain of the Green Deal. For example, the number of households the government wish to engage with will require a greater number of accredited Green Deal advisors and installers. There will also be demand for materials such as insulation and renewable technology installations for household upgrades and marketing to promote the scheme nationally. This and more is covered on the Renewable Energy Institute’s Green Deal Training Course.

References

A – Transforming the UK’s Existing Housing Stock – http://bit.ly/11kvEGF B – https://www.gov.uk/government/policies/helping-households-to-cut-their-energy-bills/supporting-pages/green-deal C – http://www.ukace.org/wp-content/uploads/2013/03/ACE-and-EBR-fact-file-2013-03-Cold-man-of-Europe.pdf D – http://www.guardian.co.uk/environment/2011/nov/23/green-deal-insulate-homes E – http://www.bbc.co.uk/news/uk-21226042 F – https://www.gov.uk/green-deal-energy-saving-measures/how-the-green-deal-works G – http://www.greenassess.co.uk/energy-efficiency/services/greendeal.aspx H – http://www.guardian.co.uk/environment/2011/nov/24/treasury-200-million-green-deal I – http://www.guardian.co.uk/environment/2012/may/16/david-cameron-green-deal-homeowners J – http://www.guardian.co.uk/environment/2013/jan/06/green-deal-upfront-fees-upgrading K – http://www.guardian.co.uk/environment/2013/jan/23/not-heard-green-deal-poll L – http://www.telegraph.co.uk/finance/personalfinance/9838241/Green-Deal-provider-Npower-warns-schemes-interest-rates-are-too-high.html M – http://www.guardian.co.uk/environment/2011/nov/23/green-deal-14-million-homes N – http://www.thetimes.co.uk/tto/business/industries/utilities/article3777315.ece

Written by Cora Moran for the REI