The Green Deal was hailed as a saviour of the world. The largest home improvement programme since World War II, it was announced at a time when global warming was all over the media and the focus on energy reduction was at its peak. The Green Deal promised to help homeowners cut down on energy consumption – thus saving them money in the process. But despite all the promises, the deal was abandoned last summer – just over two years since it rolled out. But why did the government decide to abandon the once much-promised deal?
Let’s start by explaining what the Green Deal actually was
Officially launched in January 2013 with the intention of handing out loans of up to £10,000 in order to improve domestic energy efficiency, the Green Deal promised to help people make their homes more efficient without costing the individual a lot of money all in one go. Instead, repayments would be made over a number of year – up to 25 for some work, including cavity wall insulation – by taking small payments out of energy bills that would never amass to more than the savings made.
Energy efficiency improvements ranged from new boilers, to loft insulation and of course cavity wall insulation. Homes were essentially assessed by Green Deal accredited workmen and the work was scheduled in to be done.
The whole scheme was the flagship energy saving program and formed a large part of David Cameron’s, the then Prime Minister, to create “the greenest government ever”. However despite the buzz around the scheme, poor take-up meant that it wasn’t feasible to continue running the deal for any longer.
Why did it fail?
Despite looking like a win-win on the surface, there are a couple of reasons why the scheme failed. Firstly, the interest rate on repayments was too high. Although it would never cost the homeowners more per year than the savings, it would often take a long time it repay due to hiked up interest rates. Secondly, the application process was extremely long-winded for homeowners, resulting in many abandoned the applications half way through. Thirdly, the calculations for savings by Green Deal providers was tough to work out, meaning that ultimately the amount of finance made available was sometimes not enough to cover the install costs of some of the energy saving measures. And lastly, many auditors state that it did not deliver meaningful benefits and actually didn’t result in many savings at all.
Was OFGEM right to halt the scheme?
This depends entirely on your stance and whether you benefitted yourself or not. Many argued that because the repayments were between 10 and 25 years, the savings wouldn’t be seen for a long time. However surely it’s better to not be wasting energy and money and doing your bit for saving the planet?
The general feeling by many is that the scheme could have worked better by making simple changes; smaller interest rates, the loans not being fixed to the house and a simpler process altogether. It has also been said that it would have benefitted from tougher criteria to ensure that the savings made would be more significant to ensure greater savings for homeowners.
Despite the Green Deal stopping, homeowners can still take advantage of savings. Homeowners can save up to 45% off the cost of double glazing, boilers and solar panels. This route has proven to be popular, primarily due to the high interest rates incurred under the original Green Deal scheme.
Did you benefit from the Green Deal?