Green Deal

The Energy Bill (2011) includes the Green Deal as its main provision and will replace grants as the way to help householders and businesses invest in reducing their energy use. It is expected to become law during 2012 and the Green Deal is planned to be launched in the autumn of 2012.

The scheme includes the ability to take out a loan to carry out measures to reduce energy bills and then repay the loan from the energy bill savings. In that way whoever uses the Green Deal will pay no more in total than they already pay for their energy. That promise is called the “Golden Rule” and with energy costs continually rising, by reducing energy use, the bills will continually reduce in real terms.

The loan will be attached to the property not the householder so if you sell, the new owner (who will benefit from the improved energy efficiency) will continue the loan repayment. They will still be better off than if they had moved into the house without the improvement measures. When the loan is paid off, the full benefit of the reduced fuel bills will be available to the current owner.

The scheme will require a Green Deal Provider (who could be a local council, an energy supplier or even a large retailer) to work with a finance company to provide the loan and contractors to install the improvement measures. They will also need trained and accredited energy assessors to calculate the savings from a range of improvement measures to ensure that the loan repayments still provide a saving for the owner.

The Green Deal scheme requires little or no government funding and works on a fully commercial basis with repayments made through the electricity bill and the loan will include an interest payment.

The details have yet to be finalised but the government expects to see a range of different Green Deal models develop where some energy suppliers may organise their own schemes on a national basis or councils and other local organisations work together to create local schemes that support the local economy by employing local firms and improving job prospects for local people.