What is the Green Deal Scheme?

The Green Deal is the flagship government initiative to increase the energy efficiency of British properties in the public and private sector with four primary objectives:

1. To provide advice and recommendations to improve the energy efficiency of UK homes.

2. To improve the energy efficiency at no upfront cost to the homeowner.

3. To provide reassurance that improvements will be executed to the highest standards.

4. To allow repayments to be made through energy bills, with the opportunity of switching supplier at any time

It was firstly proposed to parliament in December 2010 as the focal point of the Coalition Government’s Energy Bill, and was officially launched on 28th of January 2013 for application to both the domestic and non-domestic sector.

At the heart of the scheme is the “Green Deal plan”, an innovative financing mechanism which allows consumers to pay back through their energy bills. This means consumers can see the Green Deal charge alongside the reductions in energy use which generate savings on their bill. It also means that if they move out and cease to be the bill-payer at that property, the financial obligation doesn’t move with them but moves to the next bill payer: the charge is only paid whilst the benefits are enjoyed.

In this way, the Green Deal differs from existing lending – it is not a conventional loan since the bill-payer is not liable for the full capital cost of the measures, only the charges due whilst they are the bill-payer. This means it will pass on to the next owner of your house if you move.

The government has appointed a Green Deal Registration and Oversight Body. Part of their role is to register the organisations that are approved to deliver the Green Deal – Advisors, Providers and Installers.

What protects the consumer?

There are a number of important consumer protections embedded into the Green Deal which include the following prerequisites for all Green Deal plans:

• The expected financial savings must be equal to or greater than the costs attached to the energy bill, known as "The Golden Rule" of the Green Deal. This basically means that you should never pay back more in loan repayments than you are saving on your energy bill.
• The measures must be approved and the claimed bill savings must be those accredited through this process.
• The measures installed must have been recommended for that property by an accredited Green Deal Adviser who has carried out an assessment.
• The measures must be installed by an accredited Green Deal Installer.
• For householders, the Green Deal Provider must give appropriate advice within the terms of the Consumer Credit Act and take account of the individual circumstances of the applicant.
• The Green Deal Provider must have consent from the relevant parties, including the express consent of the current energy bill-payer.
• The presence of a Green Deal must be properly disclosed to subsequent bill payers (e.g. new owners or tenants) alongside energy performance information.
• Energy suppliers must collect the Green Deal charge and pass it on within the existing regulatory safeguards for collecting energy bill payments.

Next:  Why do we need Green Deal