Is the Green Deal helping those who need it?

The Green Deal is the Governments flagship energy efficiency scheme, which they hoped would improve the efficiency of millions of homes in the UK.

The scheme is now over two years old, but are the people that actually need the financial support to improve their homes getting it?

We sat down with Bernard Hughes a few weeks ago – he is the communications manager from the Green Deal Finance Company and he was telling us about the current install profile. By far the most popular measure being installed by boilers, but it was the second most popular measure that is being installed that I thought was the most revealing about the whole scheme.

The second most popular measure to be installed under the Green Deal is Solar PV – we know that solar PV needs quite a substantial investment by the household on top of the Green Deal finance to cover the install costs, so this isn’t going to be affordable for those in energy poverty and wouldn’t make sense to prioritise in homes that have some money but are struggling to maintain the warmth in the house during the winter months.

Obviously many people have had works carried out under the ECO scheme for energy saving measures like cavity wall insulation and loft insulation, and some people also managed to get boilers installed under this scheme but with the rates being paid to installers dropping by the day, jobs that used to be marginal are not simply not worth doing.

It should therefore be the time for the Green Deal to really take off – in principle it works, the energy savings resulting from the installation of measures are used to provide finance for households to cover some of the initial costs – so why then is the uptake so low?

Why Isn’t the Green Deal Working?

The main reason is actually not the reported high interest rates, it is simply the amount of finance that is made available is not sufficient to cover the installation costs of the measures in most cases.

It actually comes down to the size of the property – or the energy demand of the property. In a big house, energy bills are normally higher than a smaller house. This is basically because there is more space to heat and more heat loss surface (more external walls, more roof area etc).

If you were to put a new boiler in a big house the energy savings are larger and therefore the amount of finance made available is larger too. Conversely in a small house with a small heat demand, putting in a new boiler won’t produce massive energy savings.

Big House = Larger amount of finance available

So if you live in a small home, the chances of getting a new boiler covered by the Green Deal is near enough zero – but if you live in a big house you can get it covered. Without trying to generalise too much, it is unlikely that someone living in a 6 bed house needs financing for a new boiler!

The other thing about the Green Deal finance is that despite it is open to all households in the UK, it does require a certain credit rating. If the person applying doesn’t meet that rating then they will fail the check. It goes without saying that there is a higher number of people in fuel poverty who are in this position. So while these people are perhaps the ones that would most benefit from the scheme, the financial situation they are in prevents this from happening.

Obviously it is unfair to blame the Green Deal finance company for this – they can only risk so much, but there needs to be an option for those that fall through the gap – those that can’t get Green Deal finance, but also don’t claim the necessary Government entitlements to get these measures installed for free.

A study was done in America last year that showed energy efficiency programs are about one half to one third the cost of building new power plants.

In the UK, a huge number of our power plants are due to come offline over the next 5-10 years, so with supply falling we really need to lower to energy efficiency to help alleviate the potential issue of blackouts where demand outstrips supply. We need schemes like the Green Deal to work so we need to find ways to overcome the issues talked about above!

Think we missed something? Do you have a different opinion?

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