/ Home & Energy

The Green Deal – will it save you money (as well as energy)?

Visual of two green hands shaking

Imagine that I’m the government. I’m going to make you an offer – it’s not earth-shattering, but I think you might like it. It’s called the Green Deal and it involves making your home more energy efficient – will you buy in?

The deal goes like this. I’m going to organise someone to come to your home, perform an assessment and then recommend the right energy efficiency measures for your circumstances.

Next, I’ll find someone to finance these measures and then someone else to provide and install them.

So far so good. Now I’ll arrange it so that over time you pay back the money for these improvements through your energy bill. But – and this is the clever bit – you’ll never be expected to pay back more a month than you end up saving on your bill from using less energy. Thus, it’s pay-as-you-save approach.

Lower energy bills

Are you interested? The government hopes so, because this is its flagship energy scheme which aims to propel the country towards reaching its carbon emission reduction targets.

At present, we use more energy heating our homes in the UK per household than the considerably colder Sweden. Overall, this amounts to 33% of our carbon emissions. Reducing this would be a sizeable step towards a lower carbon economy.

Even if reducing carbon emissions isn’t your main priority, saving money on your energy bill probably is – and this is where the Green Deal could work for you.

Even though you eventually pay the money back, the expected savings throughout the lifetime of the improvement is meant to considerably exceed the cost. And that means lower energy bills overall.

So where’s the catch?

It depends on how you look at it. The money financing the deal is effectively a loan, which means that you’ll be required to pay interest. Therefore what would otherwise be a one-off payment of £500 for cavity wall insulation could result in an eight year pay-back period costing you up to £120 extra.

On top of this, while the government hopes that the pay-as-you-save approach (or as they call it the ‘Golden Rule’) will work, there’s no guarantee.

It’s a complicated process with up to five different parties: the assessor, provider, financer, installer and you. If something goes wrong it may be difficult to work out who is at fault.

Would you consider the extra interest a price worth paying or would you rather pay up-front? What reassurances would you want in case something went wrong?

Mark Smith says:
7 March 2011

I wonder how that ‘you’ll never be expected to pay back more a month than you end up saving on your bill from using less energy.’ statement works – how would it be calculated? A couple of really warm, or really cold winters could give a false energy reduction calculation. Would you end up paying over the odds on the loan during the warm winters and vice versa on the cold ones? That might well even out your energy bills, but if there’s a long period of cold winters, may this mean the loan is not paid off in time, leading to more interest payments.


Bitter and repeated experience suggests to me that ANY (or maybe that should be ALL) government schemes, irrespective of the political colour of the conceiving government, are rip-offs which invariably result in only over-charging cowboy companies being eligible to supply (and fit) poor quality and / or outdated products.

Examples include the Laptops for Teachers scheme and the Boiler Scrappage Scheme.

Therefore I shall have no part in this scheme and will protest most strongly if there is any attempt to force everyone to be involved (such as in the energy saving light bulb scheme).

I’m delighted to do all I can to make my home energy efficient, but I’ll do it using quality products fitted by quality tradesmen whom I trust and I’ll pay for the materials and work outright when I can afford each item, not on the never-never.

“disillusioned of Sheffield”!


You certainly have had bad experiences from the sound of it! Our research has raised problems where people have been caught out by companies over charging and making exaggerated claims on energy efficiency products. But people should also take advantage of schemes – especially as we are paying for some of them via our gas and electricity bills! Like any other work in your home, be on your guard and check out the company first (even if they are energy companies!). Don’t sign up to anything on the day and try to get a recommendation. Which? members can use the Which? Local (www.which-local.co.uk). Yes, don’t get stung, but don’t lose out either….

Penny H says:
13 March 2011

To put the other side, last year my husband and I had our loft fully insulated under a government scheme and had to pay nothing, and also replaced our boiler under the scrappage scheme with no bother at all. In both cases we were very skeptical and expected to have to use a company that would add pounds to the bill, but this didn’t happen.

Mick fletcher says:
13 February 2013

Before commenting on subjects you clearly know nothing about I would do a little research first.
I run a company that is about to become GreenDeal accredited and I can assure you there is nothing ‘cowboy’ about the companies who carry out work under the green deal , bearing in mind it costs around £20000 to get qualified for the various aspects of the work we wish to undertake, we have subscribe to several new governing bodies , up our insurance to £ 15 million , under go work inspections every month, comply to PAS 2030 , and if we one single complaint we are the register ! Sadly the morons from the press don’t show the green deal in a good light,or explain its value.
You don’t have to borrow the full amount on the green deal, you could self finance the job upto 99% of the order value and then use the green deal finance for the remaining 1% , the beauty of this is that you get all the benefits of the scheme , for instance buy a boiler without greendeal , and you will get an average 3-5 year guarantee backed by the fly by night plumber , buy a boiler through green deal and you will get the 10 year minimum full guarantee backed by the likes of plumb center .
Other benefits include : no credit checks for finance , so someone with a chequered history would usually get punished by crippling interest rates, the green deal finance is secured to the electricity meter. Most high street banks will lend you money at 5 – 5.5% so green deal at 7.8% unsecured is not a bad deal, for sure you could finance it yourself, but if you we’re not expecting to live at the current address for the next 10 years then what’s the point ,because you will never recoup your investment . For further information on Green Deal check out http://www.decc.gov.uk or http://www.energysavingstrust.co.uk

Mark Smith says:
7 March 2011

Well, I have to say my house is pretty toasty after loft and cavity wall insulation was installed with a government grant.

There are many private businessmen out there who would rip you off, at least the government is accountable – up to a point – and can be voted away. I know that a lot of people have benefited from free boilers, free insulation, free light bulbs and more. And many of those in vulnerable positions.

Mind you, we could probably do with a few more votes for The Green Party to make a difference.

Matthew G says:
8 March 2011

Mark Smith highlights the problem.
The Government grants have been used previously in an attempt to reduce energy consumption, but installing insulation alone just makes the house warmer. You need to make sure the heating controls stop the house from getting warmer than you need. Heating is almost 60% of your domestic energy use (DECC figures), so fix that first.
There only three ways to reduce energy consumption:
1 Reduce waste (prevent heating unused parts of the house, stop draughts, heat leaks)
2 Reduce demand (prevent overheating)
3 Increase efficiency (use fuel more sparingly, control the boiler better, or control a better boiler better)
Minimise your energy demand.
Make sure your whole house is efficient, not just a part of it.
If we all minimise our heating energy demand, that will have a huge impact on the UK energy demand (heating and hot water in homes represent a quarter of the total UK demand!)

For Green Deal to be effective, make sure you fix what is already installed in your home BEFORE investing in something new. Then it will have more chance of working, more chance of paying back.

Mark Smith says:
8 March 2011

@ Matthew G
I wasn’t highlighting a problem Matthew. I may not have made it clear, but one can have the same comfort levels in ones property, whilst reducing the amount of energy needed to maintain them, with the use of effective insulation.