ECO Funding with Green Deal Finance – Worked Example

The following scenario shows how you can utilise ECO funding (a grant) to help pay for solid wall insulation, which otherwise wouldn’t meet the “golden rule” if paid for outside the Green Deal mechanism.

Note: the numbers have been adopted from an example provided on the Department of Energy and Climate Change website. The ECO assumption is based on £77 per tonne of carbon saving, which is consistent with the Green Deal Final Impact Assessment.

Internal Wall Insulation with ECO funding

This example is based on the assumption that figures were based on a small semi-detached house or an end of terrace property.

Insulating internal solid wall estimated to save each year £273
Golden Rule says max repayment on electricity bill in year 1 should be £273
Assume cost of work unsubsidised (needs Green Deal Finance) £5,300
Assume support from “ECO” £2,724
Cost that householder pays (i.e. cost quoted) £2,576
Assume 25 year Green Deal finance loan @interest rate 8.3%
After taking interest plus cost of job over 25 years:
Annual repayment added to electricity bill £249
Customer better off with the savings £24
Customer also receives cashback for the measure installed £650
Total customer benefits in year 1 (bill saving + cashback) £674

The customer here has received £2,724 or 51% of grant money, that they won’t have to pay back. The balance is paid for by Green Deal Finance, which means there is no upfront cost borne by the customer.


Total 25 Year Benefit to Customer

£3,974 – £2,724 ECO grant, £24 per annum net bill saving plus £650 cashback

From Year 26, the customer will make the full £273 estimated bill saving (today’s prices), once the Green Deal has been paid off.