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Is the Green Deal scheme a sham?

he Green Deal, a government scheme designed to help homeowners pay for energy efficient improvements in their homes, hasn’t had the sign up numbers expected since its launch at the beginning of 2013. With only 12 homeowners actually making repayments through the finance package on offer from the government and their respective partner companies, is there a future in the life of this energy saving programme?

This blog looks into the facts behind the subscribers to the scheme to see if the system is, in fact, too complex and expensive for homeowners.

What is the Green Deal?

The green deal is an energy saving scheme launched by the government offering homeowners the chance to install energy efficient appliance in their home with no upfront fees. Homeowners repay the loan for their new appliances through their monthly energy bills and the government claims that the difference in energy used will make up the cost of the loan repayments so homeowners won’t see a change in their bills.

When did the scheme launch?

The Green Deal launch in January 2013 and homeowners have been able to sign up since then. The government has revealed that since the plan was launched only 12 homeowner have actually gone through the process and are actually making repayments on the finance package offered by their Green Deal advisor. Their green Deal advisor will have drawn up a unique assessment of their home and designed a package right for them.

What is the status of the scheme?

The government has spent 16m on this scheme so far and had a target to sign up 10,000 homes by the end of the first year. The Department of Energy and Climate Change (DECC) release figures at the end of August to show how the scheme was doing so far. 372 homeowners are reported to have signed a contract to be apart of the Green Deal but only 12 of those homeowners have actually committed to the loan and installed energy efficient appliances.

That seems awfully low?

In defence of those extremely low numbers in comparison to the projections for the first year, DECC claims that over 71,000 homes have been assessed with many choosing to simply pay upfront for the improvements themselves instead of joining the Green Deal. DECC claims that 80% of the homes that had an assessment said they would install one form of energy-saving equipment in their home.

Problems with the Green Deal

Going off the statistics above and the feedback from those homeowners who have had an assessment, it is obvious that the Green Deal may need some tweaking if it is to take off. Here are some of the obvious flaws in the plan:

  • Interest rate: The interest rate for the loan offered in the Green Deal is at 7% that is not competitive with other financial options especially when homeowners may be eligible for free improvements or other financing options.
  • 25 years repayment: The loan offered by the Green Deal is stretched over a 25-year period and is attached to the home not the homeowner. This may be a cause for concern for homeowners with a view to selling their property in the future. They will not want to lower the appeal to their property with this additional liability to the new owner.
  • Inefficiency: Many customers who have pursued the Green Deal have faced endless problems with efficiency with the scheme, which has caused them to give up all together. The communication between providers and the scheme itself needs to be much stronger, and the effort the customer puts in needs to be minimal before it can be a success. Right now it is too complex.
  • Bad publicity: The scheme has faced some bad publicity with regards to scams. Many homeowners have been discouraged by the prospect of fake companies using them to cash in on the project.

What does the future hold for the green deal?

Despite the problems with the scheme, the aims behind it are only positive. If the system can be tweaked so that the initial problems are ironed out then it means the country will move closer and closer to reducing the overall carbon footprint of the UK. By the end of the year the scheme hopes to have over 60 companies offering finance making it much easier for homeowners to access the scheme. The cashback options is also already a success, where homeowners can get up to 50% back of the money they have spent back on a first come, first serve basis. Over 8,000 vouchers have already been issued.

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