Energy efficiency loans to be offered to homesPay-as-you-save energy efficiency scheme announced

03 March 2010

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The government has unveiled a strategy for making UK homes more energy efficient, including a ‘green loan’ scheme.

Households will be able to take out long-term loans to help them make their homes more energy efficient, under the plans.

The loans will be attached to the property where the green technology is installed, not to the individual owner. However, the loans are unlikely to be available until 2012.

Our greener living section has advice on buying loft insulation, wall insulation and how to get energy grants towards cutting energy use and saving money. You can also find out the most energy efficient home appliances Which? has reviewed in our energy saving appliances review.

Green loans

Under the new plans from the Department of Energy and Climate Change (DECC), if you have taken out a 'green loan', when you move house, the loan will be passed to the subsequent owner of the property.

The loans are designed to help homeowners avoid the up-front costs of energy efficiency measures. Britons will instead be able to pay back the loan over a long period of time, as they save money on their energy bills.

The DECC said that installing some technologies, such solid wall insulation, could reduce energy bills by £380 a year.

Energy efficient

The green loans scheme is part of a wider government strategy to make British homes more energy efficient.

Other measures in the Warm Homes, Greener Homes Strategy include:

  • an obligation on energy companies to help householders save energy, including getting energy companies to team up with local authorities to make homes more energy efficient
  • targeting help towards lower income groups, including a new ‘Warm Homes’ scheme which will see all social tenants get free energy upgrades for their homes from energy companies
  • helping tenants in rented accommodation, whose landlords have little incentive to improve poorly insulated accommodation
  • consulting on minimum energy efficiency standards for rented property
  • improving available information and standards for consumers.

The DECC said that up to seven million households will benefit from eco upgrades by 2020, and said it expects the total cost of its insulation plans to be £18.6 billion.

It said that two thirds of the money would come from the obligation on energy suppliers, and one third from the pay-as-you-save scheme, which would involve energy suppliers, banks and others.

Who will pay for the scheme?

Responding to the plans, Which? chief executive Peter Vicary-Smith said: ‘Whilst we support efforts to help people save energy, we’re concerned that consumers could end up footing the huge bill for this new strategy.'

However, he added: ‘It’s encouraging that the government backs our calls for greater transparency in how energy companies spend money on efficiency measures.’

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