/ Home & Energy

The Green Deal’s ‘golden rule’ has lost its shine

Green house

Yesterday the government unveiled the details of its flagship energy efficiency initiative, the Green Deal. Sadly, its crucial ‘golden rule’ means that joining the scheme may not work out to be such a good deal after all.

The idea behind the Green Deal is that people take out a long-term financial agreement to pay for energy-saving improvements in your home. This loan will be attached to the property, not the individual, and you’ll repay it, with interest, over many years.

In theory, under a ‘golden rule’ the repayments must be less than the savings on the energy bill. But yesterday’s announcements proposed that the basis for how much a consumer should pay back will be based on average figures rather than figures tailored to their own energy usage.

This means that many customers could potentially be paying back far more than they are saving on their energy bills.

Barriers to energy saving

Cost isn’t the only barrier to taking up energy saving measures. There are lots of free and subsidised insulation offers out there right now, and yet energy suppliers struggle to get people to take them up. People are often put off by the ‘hassle factor’, such as clearing the loft before insulating it.

Add to this the fact that only a quarter of us think energy companies are trustworthy and it’s hard to imagine customers flocking to make their homes energy efficient via the Green Deal.

What will make the Green Deal a success?

First, people need to be confident that it makes good financial sense. The so-called golden rule has to be tailored to each person’s property and their own energy usage – and must not be an ‘average household’ figure.

If the golden rule is calculated in a generic way, then whether you live in a big detached house or a small terrace, it will be meaningless. And if the interest rate is too high or the repayment system is too complex, then people are not going to sign up.

Next, when the benefits of the Green Deal are communicated – it must be in simple, easy to understand language. There must be no misleading talk of ‘free insulation’ or incentives to take up the deal, which are nothing of the kind. Yes, consumers won’t have to pay upfront costs, but over time they will have to repay the costs of the Green Deal in full, with interest.

Finally, people tell Which? that they prefer energy efficiency advice to be independent of the companies selling them the measures. The package of measures recommended by companies must be something that the consumer can trust is going to be the best deal for them. And we need robust monitoring and reporting about the impact of the Green Deal on energy bills.

Despite the information in yesterday’s ‘Annual Energy Statement’ from Chris Huhne, there is not sufficient transparency about the amount of money government policies add to our bills.

Which? wants the Green Deal to be a success. But unless people are offered a good deal that is easy to understand by a company that they can trust, not enough will sign up. The government’s aspirations for the Green Deal are admirably high. Now it must show that its proposals will deliver for consumers.

Comments
Guest
John Symons says:
24 November 2011

As a loan scheme, the Green Deal is better for people like me than paying through utility bills so that other people can have things free that do not apply to us. I have double glazing, no loft, no wall cavity and female family members who always feel cold when I am warm.

Guest

If this is the Governments “flagship policy” the fleet is doomed.
Unless the consumer actually pays less in energy bills from day one this is going nowhere.
Take an example.
A new condensing gas boiler costs about £2000 (often much more from an “approved installer”) and will last say 10 years (if you’re lucky). The repayments are going to have to be, including a little interest, something like £210 to £220 a year. So that much has to be saved in energy cost before there is any incentive at all.
I don’t think the saving and sufficient incentive is really there for most so why go for it?
Do the same calculation for things like double glazing, heat pumps, renewables like PV and solar hot water and the result is worse.
However to be fair there probably would be an incentive for cavity wall and loft insulation, but that is already available free for many and at low one off cost for all. Even then the take up has been less than perfect because many people are lazy or have some notion that they’ll get damp issues or whatever.

I suggest the government needs to think again, perhaps more along the lines of much much better cost subsidy for energy effiency improvements. They could use that £11 billion it will cost to roll out that waste of money which is the so called “smart meter” programme.

Guest
Isobel says:
27 November 2011

Many pensioners own flats where cavity wall insulation would cost them nothing but would mean other residents in the same building would have to pay. So a pensioner has the choice of holding their neighbours to moral ransome, or embarrassing the ones who can’t afford it – so is it any wonder they don’t apply?

I suggest that cavity wall insulation at least is provided at no cost to the whole block if there is at least one resident who qualifies for its free provision.

Guest

I have a small amount of loft insulation so no supplier will touch me to do it for free. In fairness I don’t trust them anyway.

Guest

William,
The general rule is if you have 60mm or less they’ll top up with another 200mm. In practice if your insulation is not above the joists they’ll top up, and that could be approaching 100mm on top of which then goes another 200mm.
Free if you’re over 70 or on a qualifying benefit or up to £150 for anyone. Some energy suppliers are installing to anyone for free but that’s probably a temporary offer and in some cases is linked to boiler service contract or at the very least a hard sell for some other product.
I can understand you not trusting them but in the vast majority of cases everything goes just fine. I’d suggest shopping around a bit to find an installer that gives you a warmer feeling.
However at the end of the day no one will or can force you to insulate and reduce your gas bill, but I’d recommend you do it.

Guest

Quite right not to trust then William. I paid for insulation, which never went into the roof, and was told that was what happened. I asked them to leave the spare insulation, that I had paid for, and they wouldn’t. Only about half the loft was covered, the rest they wouldn’t cover as it was a walk way. We had nothing in the loft, it was all cleared out.We don’t use the loft.

Guest

I think it’s pretty clear that governments of whatever hue are never on the side of the consumer. The Green Deal is a way for energy companies to get round their legal commitments cheaply. The only people who’ll be better off in ten years will be those companies.

Guest
barney says:
25 November 2011

green issues go out the window when plymouth city council and others plan to install an incinerator almost at sea level with a 95 metre stack on the edge of the city in s west position to burn household waste fromthe whole of south devon estimated 150.000 tons the prevailing s west winds will send pollution over city and north winds over saltash in cornwall ,it is claimed that gases will be cleansed but co2 and toxins are bound to be present ,a cynical move is the planning meeting which might finalise outcome is 2 days before christmas,

Guest
tourmentin says:
25 November 2011

I am rather sceptical of the whole “green energy campaign”. I think the provision of it will cost far more than the benefits it will produce. Secondly, I really can’t see what difference the UK’s small contribution will make to the global sche