Gov must reform Green Deal or ‘squander’ chance to cut energy bills

The "lamentably" slow take up of the Government's energy efficiency scheme, the Green Deal, can be attributed to its interest rates and its controversial 'Golden Rule', according to a new report.

The ‘Golden Rule’ specifies that any additional charge on the electricity bill must be less than the expected savings from the installation of measures under a Green Deal plan over the specified period.

However, according to Retrofitting the Green Deal, a report by the Association for the Conservation of Energy (ACE) and entrepreneurial charity BioRegional, common upgrade measures, such as replacing an inefficient old boiler with a much more efficient condensing boiler, fail to meet the Golden Rule.

The report says that as a result the Green Deal will cut gas bills significantly but not enough to cover the loan repayments and adds that the Green Deal loan can cover only part of the cost of the installation.

According to the report, this widening finance gap means households potentially interested in entering into a Green Deal would have to find much of the finance themselves, upfront.

“This is likely to cost them over £1,000. For many, that will be a deal-breaker,” the report states.

By the end of October, 219 Green deal customers had their work completed, while the number of people agreeing to take up the scheme has passed 1,000.

In March, the Government said it expected 10,000 customers to be signed up by the end of 2013 prompting criticism from the opposition and industry for the low take-up rate. However, the Government insists this will improve over time.

Through the report, ACE and BioRegional call for urgent reform of “a scheme which had great potential but has become a floundering green flagship for the coalition”.

Currently standing at around 8% APR, it calls for the Government to reduce the APR of Green Deal loans to below 4%.

It also recommends that ministers go beyond the existing, temporary Green Deal Cashback scheme and introduce a “long and strong” incentive for Green Deal retrofits.

This should be a Green Deal grant or a variable stamp duty land tax – or both, it says.

BioRegional chief executive Sue Riddlestone said: “Britain badly needs the Green Deal and ECO to work, for the sake of the economy, the environment and people’s wellbeing. Today we’re setting out constructive, workable proposals which could turn it around.”

ACE director Andrew Warren said: “The Golden Rule is exerting a stranglehold on the Green Deal, and all the time and trouble that has gone into setting it up is in danger of being wasted. But with reform and better support it could fulfil its potential.”

Leigh Stringer

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