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Green Deal ‘will start slow and need a lot of work’

That’s NOT official, but it seems to be pretty unanimous

Assessors should expect a very slow start to Green Deal, and newly-qualified GDAs will have to work very hard to make any headway, given the likelihood of considerable public ignorance, suspicion and apathy.

Sadly that’s the pessimistic picture being painted by everyone I have spoken to about Green Deal in the past month, and the scheme that was due to launch in October seems unlikely to even begin to take off until April or later.

The main threats that Green Deal is facing include problems with financing, and fears that promotion of the scheme will be left to the market, with possible confusion caused by mixed messages from various providers leading to public suspicion and lack of interest.

The government is still talking up its flagship energy efficiency programme, and ‘failure to launch’ is not an option given that the Coalition has put its credibility behind this, but even optimistic projections suggest that GD may not really hit its stride for two or three years – by which time we will have a general election and a new government which may have little interest in continuing with the scheme.

With just weeks to go to the official October launch date for Green Deal, its prospects have never looked worse, and clearly many in the business sector believe the scheme will offer nothing like the opportunities that the government has forecast.

At a Green Deal Business Summit at IET in Birmingham on 20 July, an audience composed mainly of SME business leaders in the ‘green’ sector were polled on a range of Green Deal questions.

Asked about the success of Green Deal, 63% thought it would be limited, despite the fact that the same percentage thought energy bills would rise sharply in the next decade, which might be thought to provide an incentive for improving energy efficiency. Almost half thought the scheme would be mainly of interest to owner occupiers.

Around half thought that the government should promote Green Deal, though it was rumoured that DECC had decided the market should take on this role.

Speakers at the event, from DECC, the Local Government Association, companies and trade bodies, the glazing industry, sustainability and housing groups and GDP British Gas all stressed their commitment to Green Deal, but urged caution over business expectations.
Carl Harvey, Director of the Green Deal Advisor Association, said he had been canvassing installation companies and found that only 5-10% knew anything about Green Deal, and only 2-3% had any interest in it.

George Marsh, Chair of Sustainability West Midlands, said there may only be a few in every 100 assessments that would lead to any work being carried out, and there was a question mark over how the costs of those assessments which did not lead to provider deals would be met.

Mandy Findlay, Energy Solutions Manager at British Gas and a former local government officer, said that the energy provider had worked hard on energy efficiency schemes with local authorities, schools and community groups, but only 18% of leads led to any measure of take up.

‘We are going to have to work at making Green Deal popular,’ she said. ‘We are going to have to do a lot of hand holding with customers.’

Meanwhile all Green Deal Providers’ development work has ground to a halt because of delays in the financing structure, according to the magazine Energy in Buildings & Industry.
I have been hearing for some weeks that there are delays in the establishment of the Green Deal Finance Company, a not-for-profit organisation being set up to channel finance to the GDPs. An initial £40 million for development was due from the Treasury some time ago, but is still awaited.
The magazine said in its current issue that most of the companies considering Green Deal provision have given the government an ultimatum over the delays.

‘They warn that even after the first £40m is released, it will require six to nine months to establish the GDFC. Any further delays will place the entire Green Deal concept ‘at significant risk’ for both businesses and customers,’ the magazine said.

These delays are likely to mean that initial Green Deal finance will have to come from commercial financing, which could well bump up the interest rates that ‘go early’ customers will have to pay, and the Golden Rule might then severely limit work which can be done under the scheme.

The other financial threat has come from a recent European ruling that the UK’s 5% VAT rate on energy efficiency solutions is illegal. This lower rate is apparently only supposed to apply to labour intensive industries, and Brussels has told the Treasury that the rate must be increased, presumably to 20%.

There will no doubt be a good deal of discussion on this issue between the government and the EU, and what will happen is anyone’s guess, but a 15% increase in the cost of work done under Green Deal could again severely limit what can be done within the Green Deal.

These problems are perhaps less likely to affect the big Green Deal Providers, who will no doubt already be gearing up to provide customers with a range of financing options, mainly outside of the Green Deal and its restrictive Golden Rule, but smaller providers and installers, who are most likely to work with independent assessors, are likely to be much more seriously affected.

Written by Terry Wardle, Editor of Energy Assessor Magazine

1 Comment to Green Deal ‘will start slow and need a lot of work’

  1. Mark Nisbet's Gravatar Mark Nisbet
    October 5, 2012 at 10:48 am | Permalink

    A very cogent piece Terry and timely. A mate of mine, not a DEA, is working for a company who are offering totally free cavity and loft insulation (Not Brit Gas et al) and he is paid £100 commission for anybody who agrees to these last of the CERT measures before the Green Deal kicks in. Of twenty solid leads – houses with poor loft ins and no cavity fill – he managed to persuade one owner to agree to the install. Hard work with a sceptical public.
    As a DEA I have been talking to clients about the Green Deal over the past year and so very few have even shown the remotest interest in loading their property with a hidden debt. A solicitor friend said that from a conveyancing perspective te Green Deal was recipe for further stalling in the house buy/sell procedure. Ain’t govt. thinking grand!

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