The Green Deal What is the Green Deal?
The Green Deal will allow you to get things like cavity wall insulation in your home, with no upfront cost.
The Green Deal is the government’s plan to help you make energy-saving home improvements at no upfront cost.
From October 2012 you will be able to get finance of up to £10,000 to help pay for energy saving measures. Although the Department of Energy and Climate Change (DECC) is championing the initiative, it is not a government grant – customers choose to take the Green Deal finance, and will then pay the money back to the finance company with interest.
It means that rather than having to dip into your savings or take out loans to install insulation, solid wall insulation, double glazing or maybe a new boiler, you can take out long-term finance that will be attached to your home.
Many of the details are still being worked out as the government develops its plans. Solar panels might be available in Green Deal packages too, but that is not yet clear. You may be able to get the Green Deal from an energy supplier, a supermarket, or another provider.
How will the Green Deal work?
The energy saving measures will be installed by companies after a home visit from an accredited 'Green Deal' assessor. The assessor will examine your property and recommend the best home improvements to allow you to minimise bills. If you are interested a Green Deal provider will offer you a quote for a Green Deal plan.
The government is keen to stress that the Green Deal is not a 'loan' in the traditional sense. In theory you never pay back more money than you are saving on your energy bills each month - what DECC calls the 'Golden Rule.'
The Golden Rule states that if your new insulation saves you £15 per month on your heating bills, for example, you'll pay less than £15 in repayments. But the Golden Rule does not actually guarantee savings, it is only an estimate based on assumptions. This means that you could be in a 'break-even' situation for many years with no actual net benefit.
The Green Deal does not work like a personal loan - it is attached to your home rather than to you, so it will be passed on to the new owner when you sell your house. But this could also be a concern for consumers, as there's uncertainty about whether the new owner will want to take on a house with a Green Deal charge attached to it.
Interest on Green Deal loans
Our research showed that energy prices are the number one financial concern for consumers, and investing in energy efficiency measures, such as insulation, can be a quick and simple way to reduce rising energy costs. However, there are still some problems with the deal that could end up leaving consumers confused or out of pocket if the savings don't add up.
Although Which? supports the government’s ambition of helping people make their homes more energy efficient, we’re not sure we could recommend the Green Deal in its current form.
See our five Green Deal challenges to government, and find out why it needs to be improved if it’s going to work for consumers.
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