Green Deal – or no Green Deal
The countdown has begun – with only 12 months before the Green Deal is due to go online.
But first, a short introduction for those who do not know what the Green Deal is. Essentially it’s a way of installing energy efficient systems, such as solar panels etc without having to pay for it up front. The cost of the installation will be borne by companies such as utilities firms or supermarket chains, who will in turn recoup the money, plus 6%-8% interest, via a small increase in your energy bill. The agreement is similar to a tiny mortgage in that, if you move house, or shop as the Green Deal is also for businesses, the agreement stays with the property.
Aaah, you might say, well who wants another mortgage – no matter how small?
Well, the Green Deal must satisfy the “Golden Rule” ie the expected savings must be equal to or greater than the costs involved in installing the system. Therefore it will always be better, financially, to have the system than to not. Moreover, from 2018 domestic and commercial properties that are let, must achieve an E EPC rating or above, to continue letting. So landlords – take note!
All these calculations and more will be undertaken by independent (more on that later) advisers – perhaps energy assessors who have undergone further training.
For an excellent, if a little lengthy, further explanation please see this BRE presentation on the Green Deal
But will it work as the Government hopes and provide the catalyst for energy efficiency in both the domestic and commercial sectors, and therefore reduce our carbon emissions and increase our energy security? Will it provide the £800 million shot in the arm to the economy that Ernst & Young have recently suggested? And on a personal note, will it provide much needed extra revenue for the beleaguered energy assessor community?
I think the answers are: a guarded Yes, No, and sadly No.
The first two questions can really be answered together as one affects the other. Research has found that when all costs are considered the Golden Rule will only work for the very easy carbon-cutting measures – any thing else will simply cost more in total than the expected savings – thereby failing the Golden Rule.
The other problem is with funding for hard to treat properties, which the Government says must receive extra money from energy firms (ECO) to make it work. As has been reported recently in Business Green if this extra money is deemed ‘non-discretionary spending’ (which has a ceiling, capped by the Treasury) then the money for the ECO will have to be taken from budgets put aside for other low-carbon strategies such as the Renewable Heat Incentive and the Feed In Tariff. This, of course, will contradict the Grand Plan of the ‘Greenest-Government Ever’ which is to cut carbon nationally.
There is also a problem of trying to be everything to everybody. It seems the Green Deal is not really built for commercial property and is actually far more suited to the domestic sector – its original aim. Many questions such as how will the Golden Rule apply to commercial properties where the energy bill is part of a larger service charge, or where the energy bill is part of a complicated contract between energy supplier and end user – remain unaswered.
And finally, will the Green Deal provide extra work for the energy assessor community? Well if the previous 5 years has taught me anything, then the answer is an emphatic, No! There is the problem of training, with far too many training providers of dubious quality being allowed to operate. There is the problem of varying standards among assessors. There is the problem of the large energy companies and high supermarkets swamping the assessor market with their own trained assessors, who will really be door-to-door salesmen selling their firm’s systems. (We’ve seen how that works for the quality of advice from utility companies). Once the market is flooded with these ‘cheap’ assessors, this has the effect of dragging down the prices of truly independent advisers. Since the prices are unsustainable the end result is a drop in the quality of advice across the board, meaning the customer and ultimately UK PLC loses out.
For more information see the DECC Green Deal Summary.