What’s the real story behind the Green Deal?

“Unless people can see the benefits of the Green Deal, take up is likely to remain low.”
Yes I agree but where are these benefits?

I think improving home energy efficiency is more than just a good idea it is an absolute necessity bearing in mind the current, and pretty certain much higher future cost of energy. Not improving your home energy efficiency for whatever reason is going to prove to be an extremely expensive lifestyle choice in coming years.

But is the Green Deal the way to do it? Well I think not and my conclusion is based on my own simple advantages versus disadvantages analysis.

Advantages:
No upfront cost except for the assessment survey, £100 to £150.
That’s about it really for advantages.

Disadvantages:
For £100 to £150 you use to be able to get your loft or cavity walls insulated under the old scheme. Even for free if a pensioner or on benefits. Now you stump up the cash before any work is done and pay full price, two or three times as much.

You’re loaned the cash and charged about 7% interest levied on your electricity bill. For loft and cavity payback might be only three or four years but total cost will have increased from say £150 with instant savings on your bills to around £700 or £800 and you’ll see no energy bill benefit until the loan is repaid.

Get a new condensing boiler from an “approved supplier” and the bottom line looks even worse. Buy the British Gas boiler route for example and you’re already paying one of the highest prices. That already high price will be further inflated to cover the Green Deal bureaucracy cost and unlike older (admittedly slightly less efficient older boilers) the thing will probably only last you ten years.
Pay for it over ten years with all your efficiency savings servicing the loan (with interest) and you have saved nothing. And that’s assuming the (not guaranteed) “Golden Rule” where repayment never exceed the savings actually works.

You are unlikely to get 100% funding on more “involved improvements like solid wall insulation and double glazing so the no upfront cost principle flounders somewhat. And the proportion you do get with the Green Deal is at 7%, not the 2% or so you could get with a mortgage type loan.

The loan stays with the house if you move. The Government says this is an advantage? Don’t think so. Would you buy a house where you continue the payments for that new boiler? or would you insist it paid off first (or at least get a substantial price reduction), Me too.
Early loan repayment will mean the seller has to pay penalty charges to compensate the Green Deal lender for loss of interest.

Tenants will be paying to upgrade their landlords property. They might be warmer but they won’t have any money and the landlord laughs all the way to the bank.

My advice:
Definitely upgrade your home but go your own way to get there.
Use much much cheaper “Gas Safe” local plumbers for that new boiler, but only when your old one is beyond economic repair.

If you need to borrow get the money from a much cheaper lender.

If you’re a tenant press the landlord for improvements out of his or her pocket and/or rent a place which is more energy efficient in the first place. Actually look at the Energy Performance Certificate before signing up, that’s what it’s for.

If you think you might move don’t make you home harder to sell by saddling it with a Green Deal loan, they’re hard enough to sell already.

To conclude:
For the poor there is ECO much like the old scheme where improvements are free I’ve no issue with that except for the way it’s funded, which I believe is still from a levy on all our bills. I think the cash should come from the treasury, general tax money, raised generally on the basis of ability to pay it rather than a levy on some regardless of that ability to pay.

So that’s what I think about the Green Deal please feel free to agree or disagree.
But at the end of the day success or failure will depend on takeup rate, so we’ll see.

I understand the Green Deal to be, installing energy efficient goods, and repaying the loan with the savings made. If this is really what is on offer then I cant see why people are not jumping on the band wagon, its a great way to start using less energy and it doesn’t cost any extra than you would have paid in the first place.

We insulated our first home in the late seventies, and were immediately enjoying the benefits, Double glazing had huge benefits, for sound and warmth. Since then we have brought and installed many gadgets to “get more for your money”.

We had Solar panels with the grant and the higher FIT, so we paid premium prices, though it is great to know even with 6 panels we are currently making more energy than we use some days.

After Double Gazing and Insulation our biggest energy savers are Solar and the installation of an Intelligent Heating Control, which I am disappointed to read, “Which” consider “beyond best practice” It provides a really comfortable living space using much less energy due to algorithms, constantly reading data inside and outside learning about your changing usage . Easily retrofitted, and the most cost effective purchase .
So why isn’t there a list of these type of control in Which magazine to find out costs and savings.

In yesteryear as an accepted way of life was “to pay on the never never”, we would buy a cooker from the gas or electricity Company, which took 5 yrs to pay off.
Why not pay for reducing our bills this way just look at what is more robust and maintenance free.

Want a green deal? Fools rush in where wise men (and women) fear to tread! Their complexity parallels that of energy tariffs which has made me wonder if the same groups of people are involved in both industries. What we do know is that our politicians are just watching and therefore by default backing all this unnecessary complexity. The message seems to be “win by confusing people”.

Chris,
I had a specific demographic in mind. Your excellent first article clearly sets out the pros and cons and I would disagree with little you said. Borrowing money is rarely a good idea. However for people in the last decade or two of their lives this is still a possible alternative funding method repayable only on death and the immediate financial benefit results in lower bills; for some this might be attractive. If the person down-sizes, then funds would become available. But if the person down-sizes to raise capital and then makes improvements the net value of the estate is diminished by the not inconsiderable costs incurred in moving. So the net gain or loss is difficult to quantify. Everyone has to decide individually. In any case moving just to downsize isn’t a practical option for all; many elderly people need to stay near to friends, neighbours and family for support.

For me the green deal is a non-starter. The house is relatively new and any further ‘improvements’ have an unrealistically long pay-back time. Five years ago my electricity was 25% higher and gas 50% higher than the last 12 months so I ‘ve reached the point of diminishing returns.

Green Deal? The loan and the high interest rates are real enough but the theoretical savings are intangible and immeasurable. You’d have to be bonkers to take out a GD loan on those terms.