What is Green Deal?

The Green Deal is a new way to pay for energy-saving home improvements. You can take out Green Deal finance to pay for measures such as loft, cavity or solid-wall insulation, double glazing, a new boiler or even a ‘micro-generation’ system, such as solar panels. The loan is repaid through savings made on your electricity bills, so your bills shouldn’t be any higher than usual. Once the loan is paid off you can take full advantage of the energy savings.

What does the Green Deal cover?

Green Deal covers the following products:

  • External Wall Insulation
  • Boilers
  • Solar Panels
  • Cavity wall Insulation
  • Loft insulation

How Does the Green Deal Work?

Under the Green Deal, the government will offer loans to any UK home or business wanting to make energy efficient improvements to their property. The loan can be taken for up to 23 years and is added to the property’s utility bills. The debt stays with the property, so when an occupant moves, the new owner or tenant will take on the repayments. There is a Golden Rule which states that expected savings over 23 years must be equal to, or higher, than the initial cost of installing the energy efficient device.

How do I go about Getting My Boiler Replaced Under the Green Deal?

Once the Green Deal goes live, potential candidates will be visited by a Green Deal Assessor, to be known as a GDA, who will produce a Green Deal Report. During this assessment the GDA will calculate the effectiveness of your current boiler and compare it against modern boiler systems.

Boilers are rated in their efficiency from A to G. Older boilers usually fall in the C to G category because while they may burn fuel effectively, hot gases often escape up the flue which causes the loss of heat.

A rated boilers are condensing boilers which send cool gases up the flue to prevent this happening. As a result, more of the heat is retained in the boiler itself and can be used to heat a property.

It is estimated upgrading to an A rated boiler from a G rated one saves around £300 a year.

If the GDA finds a higher category of boiler is available, they can begin the process of arranging the finance and overseeing the installation of the new boiler. Once the report is complete, the resident is welcome to shop around to get the best quote possible or they can leave it all to the GDA.

The government has suggested that a fee of £129 may be charged for the visit of the GDA but also the customer may be able to claim it back once the boiler has been fitted. Please ask regarding refund once boiler has been fitted

The Green Deal’s Golden Rule

“The Golden rule is you only pay the loan and interest back through the saving you make by installing the measure.
For example – if your paying £50 a month and your bill goes down by £25 you only pay the loan back with  the £25 you have saved so you never pay anymore than your paying now…”

There is an element that all properties that want to take part in the Green Deal must pass; this has been named ‘The Green Deal’s Golden Rule’, this rule is intended to protect the property owner and act as the back bone of the initiative.

The Green Deal’s Golden Rule states that the energy savings a property makes in a 23 year period (it is possible to choose a shorter period of time, but return on investment must be paid for within the time period) must be equal to or more than the cost of implementing the changes in the first place. In essence no one wants to install a measure that won’t pay for itself.

The “Golden Rule” also states that Installations must also be carried out by accredited Green Deal Installers. This ensures that the property owner is not investing money in work which will not save them money on their energy bills. Each property will first of all be visited individually by an objective Green Deal Assessor and then allocated an amount of money to buy the measures, no actual money will change hands, dependent on the potential savings.

With the emphasis on protecting the property owner, the Green Deal Golden Rule will place a cap on the amount that can be collected in the first year of a Green Deal payment to the estimated annual savings. This also safe guards the installers and helps reduce the risk of the property owner not being able to make the payments. The amount the Green Deal payments will increase by during the following years will also be controlled.

The Caveat

It is impossible to predict or guarantee a rise or fall in future energy costs. Although the Green Deal’s Golden Rule will protect the property owner in the short term, it is not possible to guarantee that future energy savings will not increase over longer periods of time. It is worth mentioning, however, that property owners who have invested in the Green Deal, are likely to see their energy costs rise less than they would have done without the Green Deal measures in place.