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Public snub Green Deal energy scheme

Green piggy bank and a lightbulbA government scheme aimed at encouraging people to invest in energy efficiency improvements for their homes has failed to capture the public imagination.

Just 132 households signed up for the much-heralded Green Deal programme in the first eight months it was in operation.

That's according to figures released by the Department for Energy and Climate Change (DECC).

Green Deal explained

The Green Deal was introduced in January as a way for consumers to finance home-improvement projects, such as loft insulation and double-glazing, designed to cut gas and electricity bills.

There are no up-front charges, but the cost of repaying the scheme's long-term loans – deals are expected to run for 25 years – are deducted from the home's monthly electricity bills.

The Green Deal's "golden rule" states that the cost of the finance package over the 25 years should not exceed the savings on energy bills that the improvements generate.

But there appears to have been little appetite so far to sign up.

Low sign-up figures for Green Deal

The DECC says that 58,000 people have applied for a Green Deal assessment.

This involves having a property checked to see what improvements would be suitable or most beneficial.

But only a fraction of these applicants have then gone on to agree a finance package and arrange for the work to be carried out.

Energy minister Greg Barker said: "This ambitious long-term programme is still in its initial months. 

"But over 58,000 Green Deal assessments shows genuine consumer interest and we expect continued steady growth as we go into the winter."

But Labour said that the government's figures showed that only 1 per cent of those who had a Green Deal assessment then went on to sign up.

Why are households reluctant over Green Deal?

As Confused.com reported when the Green Deal launched at the start of 2013, there are a number of reasons why consumers may be wary about scheme.

  • The potential interest costs: It is not clear how expensive the Green Deal loan packages are likely to be. But spread over 25 years, interest bills are sure to mount up significantly, even if monthly repayments are relatively low.
  • Will the golden rule be met? Energy bill savings are supposed to offset the cost of Green Deal loans. But this calculation is based on the initial assessment, which must make assumptions such as how energy prices will change in the future. So there is a chance the calculation could be wrong and that the expected savings won't materialise.
  • Green Deal loans are linked to the property rather than individuals: So if you wanted to move house the buyer would be responsible for the loan repayments. This has the potential at least to slow down a sale.

Money-saving alternatives to the Green Deal

Most analysts agree, however, that gas and electricity prices will only rise in future, so it does make sense to implement some energy-efficiency measures.

David Weatherall at the Energy Saving Trust says there are a number of steps homeowners can take to cut bills without using the Green Deal.

"If you have an uninsulated hot water cylinder, you could start saving now by fitting a tank jacket," he explains.

"And while you're at it, you could also insulate any exposed hot pipework around the cylinder and around the boiler.

"It's easy to fit yourself, the materials for the whole lot will only cost you around £25, and you'll save £60 a year."

Control your heat

Weatherall adds that room thermostats can help save cash. 

"Whatever the age of your boiler, the right controls will let you set your heating and hot water to come on and off when you need them, heat just the areas of your home you want, and decide how warm you want each area to be."

He also says that more grants may now be available for insulating "hard-to-treat" cavity walls.

Cavity wall insulation

"Cavity-wall insulation and solid-wall insulation are expensive measures but have big long-term savings for the homeowner.

"For example, external solid wall insulation can save around £490 a year.

Watch our short video: Cavity wall insulation explained.

"Through the 'Carbon Saving Obligation' part of the Energy Company Obligation, funding can be provided to insulate hard-to-treat cavity walls and solid walls.

"So households which previously couldn't benefit now can.

"We recommended calling the Energy Saving Advice Service on 0300 123 1234 to work out if your home is eligible for these grants to help pay the cost of the insulation."

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Chris Torney

Chris Torney

Chris is the former personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris



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