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Wednesday, 16 January 2013

Green Deal or Green Steal?

The Government anxious to meet its ambitious targets for reducing carbon emissions has launched a new scheme called "Green Deal" for homeowners and businesses to encourage them to retro-fit homes and workplaces with a variety of measures designed to increase the energy efficiency and insulation of the buildings.  This scheme is officially launched on 24th January 2013.  The concept is that homeowners and businesses will get an audit of their properties and Green Deal Assessor will come up with recommendations.  This could be a simple as increasing the insulation in your loft to recommending heat exchange systems are installed replacing conventional boilers.   There will be fully Government accredited Green Deal Installers who will carry out the works.  There is up to £10,000 available for each homeowner in funding from the Green Deal Initiative and it is understood that this will be funded with a loan at a interest rate expected to be around 6% per annum repayable over a number of years by a deduction from the homeowner's or business's electricity bill. 

The attraction for the homeowner or business is that you get to reduce your energy bills, do your bit for reducing greenhouse gas emissions without any upfront cost. 

Is there likely to be a stampede as with the solar panel installation debacle which was so popular, the government had to drastically reduce the benefit to homeowners via the feed in tariff?  

The devil is in the detail as with so many government initiatives.  How much will the initial assessment cost and will homeowners be willing to pay this?  Will the charge that attaches to the property put off future homebuyers as the terms of the loans may be as long as 15 years?  Will the accredited Green Deal installers be offering the best prices for these improvements and equipment or could the homeowner/business get a better deal on their own and by funding their improvements through a loan or further mortgage advance?  What improvements will the Green Deal Assessors come up with?  What if the homeowner wants more radical improvements?  What if the homeowner disagrees with the assessments? 

Whilst heat exchangers and heat sink systems are becoming increasingly more economic and efficient, they often rely on the house being well insulated first and sometimes with older properties, there is only so much you can do in terms of improving insulation and heat efficiency. 

A lot of interest will be focused on the early adopters.  If the initial assessment was free, then a lot of homeowners would have the survey done to explore the possibilities especially as energy bills have been soaring recently and are putting massive pressure on low-income households.