The Hive

Posted on October 3, 2011 by Sarah Daly

Most people I speak to, members of the public and businesses alike seem to be blissfully unaware of a great opportunity which will benefit pretty much everyone when it’s launched in autumn 2012 – it’s called Green Deal.

Green Deal, following on from Feed in Tariffs and Renewable Heat Incentive, is part of the long-awaited Energy Bill and, in my humble opinion, is the most sensible of all the Government schemes in the massive drive to reduce energy consumption, by prioritising the improvement of building performance. It’s something everyone should know about as it covers domestic and commercial buildings. There’s lots more information on www.decc.gov.uk and it’s worth tracking the media as this scheme unfolds. Basically anyone with an energy meter (except social housing which is covered separately), should be able to benefit.

Put simply, Green Deal is about providing the measures for the greatest possible reduction in energy use in UK buildings. The basis for this is quite simple; a (qualified and registered) Green Deal Assessor will inspect the applicant’s property and provide a list of recommended interventions which will have the greatest impact on energy reduction. These could include anything from insulation to new boilers, windows, lighting, controls or even renewables. When fully costed the recommendations must satisfy the so-called ‘golden rule’; that is the loan needs to be fully repaid through energy bill savings over a given period. There will be a domestic version, one for SMEs and another for larger organisations, each designed to meet the specific needs of those categories so companies, for example, can benefit across all their metered buildings.

So what’s so different about this scheme? Firstly, there is no capital outlay for the building owner nor is it like a traditional loan agreement so will not affect credit ratings. It is levied against the energy meter by the energy provider so it’s entirely portable with the sale or re-letting of the building. This is a critical requirement in upgrading building stock as very few would invest in high value upgrades unless they could see a very short term return and in the current climate many quite rightly, don’t want to take out loans.

So to give an example of how this would work in a domestic scenario:– Mr & Mrs Smith call an accredited Green Deal Assessor and they come up with a list of, say five measures which would achieve a 50% energy saving under the ‘golden rule’. Currently the Smiths pay £200 per month for their energy so this should be reduced to £100 per month on energy but they will continue to pay £200 to their energy provider and that extra £1200 per annum will finance the interventions (including all installation and interest costs) over the required number of years.

After the Green Deal obligations have been discharged, the Smiths (or subsequent occupiers) will benefit from 100% of the savings. The other big advantage, apart from being more comfortable in their energy-efficient home, is that they will be less susceptible to surging increases in energy prices as their usage should be 50% less so there will be some important energy cost future-proofing for cash-strapped households. Of course there will need to be some education and behaviour change in there too – even energy-efficient heating and lighting systems need to be turned off!

A recent survey by the National Landlords Association revealed 2/3rds of private landlords would take advantage of Green Deal so that’s great news for tenants – often those in greatest danger of fuel poverty, as landlords will now have every reason to upgrade their properties.

All organisations should see Green Deal as the time to literally get their house in order too. This is a guaranteed way of controlling operating costs and creating a more comfortable, and in many instances more healthy, working environment.

And there’s another reason why organisations in the building services and supply sector should be taking note. All this frenetic building upgrading is expected to create some 250,000 jobs – which is about 2500 pro-rata in Gloucestershire. Of course there are still major discussions about how to manage the reskilling and upskilling agenda as many electricians, plumbers, small building contractors etc won’t necessarily be able to deliver the quality of installation required and many fear that quality control and consumer protection will be the biggest challenge as people dash to take advantage.

Astute players will already be anticipating this massive market opportunity and identifying training providers who will be able to provide accreditation when the new guidelines are released in early 2012. The Energy Bill passed through the Commons in September with cross-party support and through the Lords on 4th October, following the timeline set by the Coalition Government, so Green Deal should therefore be in everyone’s vocabulary as we head towards the launch in 12 months’ time.