Rural homes and businesses could be made more energy efficient through a new government scheme called the Green Deal.
From Monday (28 January), this offers loans of one to 25 years for energy-saving improvements, with the loans repaid through electricity bills.
Under the Green Deal there should be no upfront payments and annual energy savings should amount to at least the value of the loan repayments.
Eligible energy-saving improvements include loft or cavity-wall insulation, heating, draughtproofing, double glazing and renewable-energy technologies such as solar panels or wind turbines.
In order to qualify for the scheme, an assessment of energy efficiency must be made and improvements suggested. Accredited assessors carry out these surveys, while accredited installers fit the energy saving measures and accredited providers organise the loans. Assessments are expected to cost between £80 and £200.
Government estimates say that more than half of homes do not have enough insulation, an efficient boiler or proper heating controls. Rural homes often had inefficient heating systems and poor insulation, said Andrew Kneeshaw, managing director of the Farm Energy Centre.
“Often the benefit of a new boiler or more efficient lighting in terms of payback may be better than the returns from solar panels or wind,” he said.
How The Green Deal works
- Offers one- to 25-year loans to fund energy efficiency measures in homes and businesses – repayments should not cost more than the saving in energy bills resulting from improvements
- After assessment, businesses registered as Green Deal providers can discuss and quote for work but there is no obligation to have the work done or to take a Green Deal loan
- Those on benefits, a low income or who live in an old property may be able to get extra help with costs through ECOs
- Early entrants for the Green Deal can claim cashback for a limited period
- Green Deal attaches to the property and its electricity bill, so when a house is sold or re-let, the buyer or new tenant takes on the Green Deal agreement
- Landlord or seller must show buyer or tenant a copy of the Energy Performance Certificate explaining any improvements and repayment obligations under the Green Deal
- The electricity supplier can only be changed if the new supplier is part of the Green Deal scheme
- From 2018, only properties with an EPC of E or better can be offered for letting
There was potential for rural homes and businesses to benefit from the Green Deal but those thinking of taking it up should carefully check what was on offer in terms of the recommendations for improvements and the competitiveness and length of the loans, for example. It was also important to appreciate that sometimes the assessors may be linked with certain installers or providers.
Better energy efficiency did not always bring lower bills, warned Mr Kneeshaw. “What happens in a lot of cases is that in old buildings when you reduce the heat loss, people become comfortable and don’t turn down the heating – that might be a good thing but it’s not necessarily reducing energy costs.”
Strutt & Parker’s head of resources and energy Michael Verity welcomed the Green Deal as good news for those in the countryside.
“Historically the market has been typified by single-technology sellers but the Green Deal focuses on the overall solution which is what’s best for properties.
“If nothing else, it focuses minds on energy efficiency. It shows that you can do it profitably and that there is a return from it. The starting point, though, is to see what you can do to reduce consumption – that’s not just insulation, it’s about putting in heating controls. The first step is always to try and reduce the amount of heat consumption.”
Alongside the Green Deal are Energy Company Obligations (ECO), whereby energy companies will have to fund energy-efficiency improvements to properties that are difficult to improve, such as many older properties built without cavities, or for people in fuel poverty or who are deemed priority categories.
“This will be funded through a levy across all energy bills. “The main focus of ECO is solid wall insulation,” said Mr Verity.
“When you are looking at refurbishing cottages, you must look at wall insulation and see what the options are. You can decide to go under the Green Deal but not access finance. It’s about looking at how you do things efficiently through the business.”
The domestic Renewable Heat Incentive and technologies eligible for Feed-in-Tariffs were also options under the Green Deal.
It was also important for those with rented property to make sure that these meet the new requirements in 2018 when only properties with an energy performance certificate with at least an E rating can be let.
“The Green Deal will not be for everyone,” said Julie Robinson of solicitor Roythornes. “But it is worth getting to grips with the detail and seeing whether it stacks up in your own circumstances.
“Landlords may be approached by residential tenants and will – eventually – be prevented by legislation from unreasonably refusing consent to make energy-efficiency improvements.”
Farm Energy Centre’s Green Deal tips
The Green Deal is in its infancy – the people you are dealing with might not know all the ropes in terms of assessment and giving you the right answers, so check out solutions to see if they seem reasonable.
Green Deal providers tend to be the largest companies because the government will only consider those that can offer all components on the Green Deal shopping list. Smaller, cheaper, more specialist providers might be frozen out, so solutions offered may not be as cost effective as they could be; check out alternative suppliers.
Interest rates on Green Deal loans at just below 7% are reasonable but not jaw-droppingly good, especially if the solution ends up costing more than a local supplier would charge. Extending a mortgage or other loan might be cheaper than a Green Deal loan.
There are some cashback incentives for earlier adopters – these are limited but will make a difference to the whole deal.
Some providers have their own assessors – despite them being required to act ‘independently’ there is a concern that they may favour their own solutions.
FIND OUT MORE
Energy Saving Advice Service – England and Wales www.energysavingtrust.org.uk, 0300 123 1234
Energy Saving Scotland www.energysavingtrust.org.uk/scotland, 0800 512 012
If you want to pay back your Green Deal loan before it runs its term there may be a charge – check before you sign up.
It’s not clear whether the Green Deal component of an electricity bill will allow free and easy swapping of electricity suppliers to get the best deal in future – take the example of the Feed-in Tariffs – some of the small suppliers don’t support the administration of FiTs payments.
If Green Deal loan periods are very long, people could end up paying for improvements in 15 years’ time, when the equipment they are financing broke down five years earlier.
The projected energy cost saving each year should be more than the repayment of the loan.
The cost of energy saving improvement through higher charges on electricity bills is passed on to new owners of a property. If the electricity account has a hefty Green Deal uplift for past expenditure, buyers might be put off.
Don’t rush to the Green Deal as the only good offer on the books. Electricity supply companies have offered free or cut-price insulation under the Carbon Emissions Reduction Target scheme and although this has ended, similar schemes are still open. Other regional support may also be available.
Measures for improving energy efficiency
1. Pipework insulation and heating cylinder jackets Reduce heat loss putting less strain on boiler
2. Draughtproof windows and doors Brush strips are very effective
3. Double and secondary glazing Reduces heat loss from windows
4. New condensing gas or oil boiler 30% improvement on a 10-year-old boiler (renewables also possible)
5. Lighting systems, fittings and controls Can give 80% reduction in electricity use
6. Upgrade heating controls Thermostatic radiator valves and thermostats
7. Solid or cavity wall insulation (not suitable for all buildings)
8. Loft insulation (be sure to use the correct type)
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