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What is the UK Green Deal Scheme

The Minister for Climate Change, Greg Barker, has described the Green Deal as “the biggest home energy improvement programme of modern times”, but what will this mean to millions of homes and businesses in the UK?

October 2012 will see the launch of the UK Green Deal Scheme by the Government, who have pledged a £200m investment to start off the scheme, in the hope of meeting the government targets to reduce carbon emissions in the UK by 80% by 2050.

The Green Deal scheme will mean no up- front costs for homes and businesses when they carry out energy efficient improvements for example, solar panels, cavity wall insulation, energy efficient boilers etc. The costs of these energy efficient measures will be recouped over a 25 year period or less, by a charge on your electricity bill. The idea being the money you have saved on your electricity bill, by installing these energy efficient measures will help you pay back the cost of installing them.

The Green Deal Scheme will not be means tested so people with poor credit history will not miss out on the scheme. The debt will stay as a charge on the electricity bill and will not be a charge on you or the property.

However they will be one condition and is likely to be known as the “Green Deal Golden Rule” and that is that any expected savings must be greater than the cost of the work being done.

So how will the Green Deal Work?

Firstly a Green Deal Advisor or Assessor will perform a Green Deal assessment on the property, this can be a home or a business. It hasn’t been confirmed yet whether there will be any charge for this assessment at this time but this will be confirmed before the new scheme is launched.

The assessment will be carried out based on the current lifestyle and energy usage of the residents of the property and from this assessment of the property the Green Deal Advisor will produce a Green Deal Report from which a Green Deal plan will be formulated in which recommendations will be made based on the assessors findings.

The exact energy efficient recommendations that will be included in the report are still to be confirmed but are said to include such things like: cavity wall installation, condensing boilers, double glazing, solar panels etc.

Once your Green Deal plan has been agreed, there will be a cooling off period before proceeding to the next stage, which will be to instruct a Green Deal Provider. It is entirely up to you which provider you choose and do not have to instruct your current electricity supplier to be your Green Deal Provider. There may be a number of incentives available depending on which provider you choose, so it may be worth shopping around at that point to ensure you are getting the best deal for your requirements.

Once you have chosen your Green Deal Provider they will give you access to up to £10,000 Green Deal Finance and it is their responsibility to make sure that you fully understand how this Green Deal finance will work for you, in not only explaining how your property will qualify for this Green Deal finance but also how this Green Deal finance will be repaid.

Once you have chosen your Green Deal Provider the next step is to choose a Green Deal Installer who will actually carry out the work for you. Again you do not have to use your Green Deal Providers own installers, you are completely at liberty to choose your own Green Deal Installers. The Green Deal Scheme is being created in such a way that you have the freedom along each step of the Green Deal scheme to be able to choose who you want to provide your Green Deal finance.

The Green Deal Installers will then carry out the pre-agreed Green Deal energy efficient recommendations from your Green Deal Report, as laid out in your Green Deal Plan. The Green Deal Installers will be paid back directly by your chosen Green Deal Provider using your Green Deal Finance, as agreed at the start of the process.

Customers using the Green Deal scheme will still be able to change energy suppliers and once the cost of the Green Deal Plan has been repaid in full the repayment charge will be automatically and permanently removed from all energy bills.

Green Deal for Businesses

Similar to domestic householders businesses will also get the opportunity to apply for the Green Deal Scheme when it is launched in October 2012.

All sizes and types of business energy users will have the chance to benefit from individual energy efficiency measures under the new Green Deal scheme.

Exactly the same as the domestic Green Deal scheme businesses will undergo an assessment from a Green Deal Advisor/assessor and will receive recommendations that could be made to the business in their personal Green Energy Plan.

Business owners then go on to choose a Green Deal Provider and Green Deal Installer, again with no up-front costs for these energy efficient measures to be carried out, however the same Green Deal Golden Rule will apply in that the estimated savings must be greater than or equal to the cost of the work to be carried out. The money will be paid back using the Green Deal Finance plan set out and agreed prior to the commencement of the work.

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