Is it deal or no deal for the Government’s latest eco scheme?
DESPITE the relatively soft launch of the Government’s latest environmental initiative, there are signs that the Green Deal is beginning to take off. At least that was the impression given by Peter, an independent assessor who visited my house recently. It appears he has back-to-back appointments well into next month and was as enthusiastic as a time-share salesman. But is the Green Deal the real deal?
Essentially, the Green Deal seeks to help people install energy efficient measures without incurring any upfront costs. The theory is that costs are paid over time by the savings made in adopting the energy efficiency measures. The repayments for the green loan are then added to the energy bill.
The starting point is the assessment of current energy performance in your home. This calculates potential savings achievable over a period of time based on your current usage. This enables a Green Deal provider to prepare quotations for undertaking the work. Homeowners can then take out a Green Deal Loan at a favourable rate of interest. The provider arranges the finance and will even project manage the work, agreeing with electricity companies how much is taken and when from your bill. The golden rule is that the amount you pay should be less than or equal to the savings that can be made. The list of potential energy saving improvements is extensive and frequently expensive. However, complex heat recovery systems and biomass boilers aside, the reality is most people will be looking at the usual suspects we all know about but have never got round to installing. Typically these include new condensing boilers, cavity wall and loft insulation, draught proofing and energy efficient light fittings.
So what are the downsides of this deal? Firstly, the Green Deal charge stays with the property so if you move house the new owner will have to take this over. In theory, as they are benefiting from reduced costs this shouldn’t be a problem. However, the extent to which this could affect sales still has to be seen. There may be some prospective purchasers who feel that the cost of loft insulation is reflected in the asking price so why do they have to fund it after they’ve bought the house?
Although it is still possible to switch tariffs and suppliers, in the short term there may be some smaller companies that will not have the administration facilities to collect additional payments. Furthermore, advice changes over time as cheaper, more efficient new products come onto the market. For example, triple glazing is becoming increasingly popular and will be common place in 10 years.
If you can afford it, then it may be better paying up front for the improvements, particularly as fuel prices are set to rise. Low interest rates mean that it is also worth looking into re-mortgaging rather than adopting green deal finance.
So back to my new friend Peter. Whilst I admired his enthusiasm, it seems that based on my current energy usage and the complexity of carrying out his schedule of improvements, I’m looking at a payback period in excess of 18 years. I know that this scheme is about more than saving money and we all need to do our bit to reduce carbon emissions. It’s just that I’m not sure I want to buy into all the red tape.
Cynicism aside, the reality is the Government has to make this initiative work. With more than 3.5m people in fuel poverty and carbon reductions targets to be met, it’s here to stay. However, the number of people who progress beyond the initial appraisal remains to be seen. It’s providing work for the rapidly expanding army of assessors, but if you can stretch to double glazing, put in more loft insulation and stick draught excluders on your front door then I’d just get on with it.
Jonathon Wingfield is managing director at Acanthus WSM Architects, Leeds, www. acanthuswsm.com