The Green Deal is here
The Green Deal energy efficiency scheme came into effect on January 28.
The Government has made this initiative its 'flagship' energy policy as it believes it will lead to thousands of extra homes and small business increasing insulation; improving their heating systems and adding controls that will give them some protection against rising energy costs.
It has set aside a budget of £125m to pay for the scheme with loans of up to £10,000 available to homeowners and small businesses, who will first be visited by an assessor, who will ask some basic questions about their energy usage.
Approved Green Deal installers, many employed by energy providers and large retailers, will then advise on potential improvements. Consumers will pay for the improvements by taking out a loan with the Green Deal Finance Company, a non-profit making organisation backed by the government.
The loan will be paid back through an extra charge added to electricity bills for periods of up to 25 years, but the improvements must meet the 'Golden Rule' that the cost of the loan is covered by the energy savings produced.
There is detailed guidance available on the energy saving measures to be used and how they will be assessed here. This explains how a measure should be used and where it can be recommended by an energy assessor. There are 45 separate measures approved for Green Deal funding.
Consumers taking out Green Deal loans will have to repay them at a maximum rate of 6.92%, according to the Department of Energy and Climate Change. On top of the loan, householders will have to pay a £63 set-up charge, and a £20 a year annual fee.
However, with energy costs set to continue rising for some years to come most energy consumers should enjoy savings over and above the amount they have to borrow
There is no formal cap on the amount that individuals can borrow, but the government expects that £10,000 will be the maximum amount that most people will apply for.
Should householders sell their home, the loans will need to be taken on by any new homeowner.
B&ES believes this is a major business opportunity for members, particularly those with experience of the residential and small business market. The Government estimates that 15 million homes would qualify for loans under the scheme.
The success of this initiative depends on experts being available both to assess the individual properties and carry out the energy efficiency upgrades - so the Government is looking to reputable companies to be in the forefront of advising their customers.
The biggest fear is that the initiative is hijacked by 'cowboys'. Consumers need to be advised to apply common sense; get three separate quotations as in normal projects; and reject heavy sales pressure. The Office of Fair Trading has already issued a warning to businesses about poor practice in this area.
For more details e-mail David Frise
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