The Green Deal is the Government’s new initiative "to transform the UK market for energy efficiency". The aim is to encourage loans to enable homes and businesses to pay for energy efficiency improvements, like installing insulation and renewable energy technologies, through expected savings on their energy bills.
From 28 January 2013, householders who use the Green Deal to make improvements such as loft insulation, solid wall insulation and replacement windows will qualify.
However, it seems that lending will need to come from utility companies or others signing up to being Green Deal Providers and lending will only take place under a Green Deal Plan if it meets with the scheme's "golden rule" which requires energy savings to be greater than the repayments. You may need to pay a Green Deal Assessor to make recommendations to you before you can approach a Green Deal Provider.
Interest rates on the loans are expected to be around 7%.
Because these targets may not easily be met the Government is also offering an initial Green Deal Cashback Scheme to try to get the scheme off the ground of around £500 per household. Energy Secretary Edward Davey said: "The Green Deal will provide unprecedented choice for consumers wanting to improve their homes and make them more energy efficient. This cash back offer will help get the Green Deal off to a flying start. It really is a great offer the more work households have done, the more energy they stand to save and the more cash they receive".
DECC's website says that, "The Green Deal is the government's flagship energy saving plan to transform the country's homes to make them warmer and cheaper to run. From next year, people will be able to access up to £10,000 upfront to pay for energy efficiency work, repaying the costs through savings on energy bills. Similar support will be available through the Green Deal for businesses and there will be extra help for vulnerable people or those living in homes which need more work than Green Deal finance alone will stretch to".
The Climate Change secretary has described the Government's Green Deal as a 'once-and-for-all refit that will make every home in Britain ready for a low-carbon future'. He was speaking at the Liberal Democrat conference in Liverpool in September 2010.
The Green Deal scheme promises to radically overhaul the energy efficiency of homes and small businesses, supporting up to 250,000 jobs by 2030, by focusing on improving insulation in our buildings.
Although the government talks about 'private companies' providing the loans, it is believed that high street chains such as Tesco and B&Q are in discussions about becoming Green Deal lenders, as well as high street banks and energy companies. What makes the Green Deal different to other loans is that the borrower will repay money from savings on their energy bills, which should mean they can slash their carbon emissions without any cost to themselves. The government hopes the first Green Deals will be made in autumn 2012, after consultations and secondary legislation is completed.
He admitted that the economic circumstances mean that DECC has had to look for new solutions and "pioneering new ways of turning this Government into the greenest ever".
He said: "We use more energy to heat our homes than Sweden, where it is seven degrees colder in January. We might as well be standing outside burning £50 notes". The Green Deal will use the money saved on energy bills to pay for insulation.
But it won't just be about insulation. He also mentioned plans for growth in generating low-carbon electricity, to power vehicles and also technologies such as heat pumps.
He explained: "Forty miles from here, at Gwynt y Mor, they’ll start building a new offshore wind farm next year, big enough to power a third of the homes in Wales. I want to see this again and again round Britain’s coasts. And there is huge potential too for other renewables: energy from waste, wave, tidal power, and solar. Much of this will be local as it is in Germany".
He pledged to improve the UK's standing when it comes to renewables. He said: "In Europe’s class of 27 on renewable energy, Britain is the dunce in the corner: we are 25th. Only Malta and Luxembourg are worse. I make you this promise now: by the end of this Parliament, we will be Europe’s fastest improving pupil when it comes to renewables".
He stated that renewable energy and nuclear power can work together to provide our future energy needs and promised there would be no subsidy to nuclear, which has made it artificially cheap in the past.
He also spoke of the revised target for cutting carbon emissions: "I am working closely with my French and German counterparts for greater ambition in cutting carbon. By 2020, we want a cut not of 20% but 30% – that's one cut that shouldn't be too controversial".
The Government’s Green Deal to radically overhaul the energy efficiency of homes and small businesses could support a quarter of a million jobs over the next 20 years.
The Green Deal will be a new and radical way of making energy efficiency affordable for all, whether people own or rent their property. The upfront finance will be attached to the building’s energy meter. People can pay back over time with the repayments less than the savings on bills, meaning many benefit from day one. It will help save carbon, energy and money.
The Energy and Climate Change Secretary said: “The Green Deal is a massive new business opportunity which has the potential to support up to a quarter of a million jobs as part of our third industrial revolution. Insulation installers and the supply chain all stand to benefit from this long overdue energy makeover.
“Energy efficiency is a no brainer. We need to tap in to this huge market to save people money on fuel bills, save carbon and help the economic recovery.”
Plans for a new Green Deal for households and businesses were outlined on 19 August by Deputy Prime Minister, Nick Clegg, as he spoke of the Government's "quiet green revolution" to create jobs and protect the environment.
The Deputy Prime Minister was speaking at the launch of a new project to provide support for new and rapidly growing businesses in renewable energy and related low carbon markets. The project is being led by TEDCO, a successful Enterprise Agency based in South Tyneside. The project aims to support the creation of 1,000 new businesses and 10,000 new jobs.
The Green Deal will combine growth in the economy with a greener and more efficient way of using energy. It aims to reduce energy demand and carbon emissions while making homes warmer, saving consumers money and stimulating green recovery in jobs.
Addressing a business audience at the launch, the Deputy Prime Minister said:
“It is fantastic to see you tapping into the potential here in the North East – a region I want to see firmly established as a hub of a new green economy. The work you are doing chimes very closely to this government’s ambition to rebalance our economy as we pull our way out of the downturn - rebalancing growth away from the South East to the North, shifting from an overdependence on the public sector to a recovery led by the private sector, and moving away from carbon-blind economic activity to business with a new carbon conscience.
“All politicians have warm words on the environment, and all governments talk about leading the shift to a new green economy. This government is going to do things differently. We won’t try and dazzle you with green gimmicks. We want to impress you by quietly getting on with the job.
Today I want to focus on plans for a Green Deal to combine growth in the economy with a greener and more efficient way of using energy. Green Deal Finance will allow householders to make their homes more energy efficient, saving on their bills, without the need for them to provide up-front finance. Homes account for a quarter of all emissions in the UK, and this is no longer a problem we can ignore. With some of the oldest housing stock in Europe we also face a huge challenge.”
Up to 14 million homes could benefit from the Green Deal through insulation. Payments will be collected through energy bills and the most energy inefficient homes could save, on average, around £550 a year.
The Government will begin legislating for these proposals in the Autumn and they are expected to take effect in 2012.
The Deputy Prime Minister added:
“We believe these proposals have the potential to unlock tens of billions of private sector spending in the coming years, and that means jobs.
I want the business and research communities that will benefit from these changes to have the confidence that they are coming. As those businesses take decisions about how they develop, I want them to be absolutely clear on our direction of travel.
This Government’s aim is to lead a quiet green revolution, not release more green hot air. We need a new kind of economy after the crisis of the old. This means more green jobs here in the North East, instead of an over reliance on financial services in the south. I believe we can create jobs and protect the planet at the same time.”
See also: How ground source heat pumps work