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Green Deal or No Deal?
Improvements to loft insulation can be completed under the Green Deal
The Green Deal was launched in England and Wales in January 2013. It is a scheme which allows business and homeowners to access energy saving improvements without making an initial cost outlay. Any costs incurred are repaid back through the savings made on the household electricity bill. However, the reported uptake has been slow.
In June 2013 it was reported that only 4 people had signed up to the scheme, with the BBC reporting that this had increased to 132 in August. When the scheme was first launched, a cash back scheme was offered in order to entice people and increase take-up. The scheme offered £1,000, on a first come first served basis, to those signing up to the Green Deal, without the need to commit to the loan scheme for repayment. So why hasn’t the uptake been better?
The Minister for Energy and Climate Change, Greg Barker, told the BBC that it’s still early days but that “over 58,000 Green Deal assessments shows genuine consumer interest and we expect continued steady growth as we go into the winter”.
A recent telephone call that we had to the office might explain why the conversion from assessments to completed projects isn’t greater. Late one afternoon we received a call from a frustrated homeowner keen to take advantage of the Green Deal but who was having difficulties finding anyone to undertake the recommended work.
The homeowner told us how so far she had paid out for three Green Deal Assessments, costing in excess of £350. The first assessment never happened after the Green Deal registered company took the money but never undertook the assessment.
The second company undertook the assessment and then told the homeowner that they couldn’t undertake the work as they couldn’t fit an air source heat pump which was the best solution. They then suggested a new gas boiler – even though there is no gas at the property!
By the third enquiry the home owner knew what questions to ask the consultant, advising there was no gas at the property, informing them that it was a listed property and admitting up front that they had already had an assessment undertaken.
However, the homeowner was advised that she’d need a third assessment and so had to spend a further £100, only to be told that the problem was the same – they couldn’t install an air source heat pump and that there were issues with accessing the finance.
Of course this might be one isolated case, but if people are continually paying out for assessments and then realising that the work can’t be completed, it is no wonder that 58,000 assessments have been undertaken, but only 132 people have signed up. This figure is made even worse by it being reported by the media that only 1 project is actually live.
On paper, the proposed idea behind the Green Deal works, particularly in the early stages with cash back incentives, but the implementation is very different. On the ground, repeat assessments are being undertaken unnecessarily and at a cost to the home and business owner. These issues, accompanied by delays in the financing, have slowed the initial uptake. All in all it’s no wonder the assessment numbers are high compared to the numbers that have signed up.
Undertaking the assessment isn’t the only cost consideration for a homeowner. The Green Deal Finance Company, who is responsible for the set-up, finance and administration of Green Deal plans on behalf of Green Deal providers, advise that they are offering an initial interest rate of 6.96% per annum. With each Green Deal Plan, there will also be a set up charge of £63 and an annual operating charge of £20.
Then there is the cost of the actual installation. There is no guarantee that the cost you pay for the work is the cheapest available and that a local tradesman could actually undertake the work for less. The Green Deal Finance Company only requires three quotes for the work when the costs exceed £10,000. We have all seen programmes where we are encouraged to get at least three quotes for building work, no matter the value, but this doesn’t seem to be the advice for the Green Deal.
So with fixed annual costs, relatively high interest rates, wasteful assessments and poor press it is no wonder that the uptake has been poor.
