The Green Deal explained

Here's how the Government's flagship energy efficiency scheme works and what to watch out for.

The Green Deal has now ended

In July 2015 the Government announced it was pulling funding from the Green Deal Finance Company in order to 'protect taxpayers'.

For more, read Government axes funding for Green Deal.

What was the Green Deal?

Very simply, the Green Deal offered loans to pay for energy insulation measures such as cavity wall and loft insulation, and renewable energy products including solar panels. The repayments for the loan, including interest, were added to a household’s electricity bills.

The whole initiative was built on the premise that the savings a household will make on its energy bills will quickly outweigh the repayments. This was called the ‘Golden Rule’. 

How the process worked

The first stage was to book a Green Deal assessment.

A qualified assessor would then spend around two hours looking at the energy efficiency of your home and how you use energy. You may have had to pay an upfront fee, but you could claim up to £100 back through the Home Improvement Fund if you went through with at least two of the improvements suggested.

Your assessor would provide you with an Energy Performance Certificate (EPC), similar to ones you see on appliances such as washing machines and fridge-freezers. This showed your current energy efficiency rating and a potential rating if you made some improvements.

Who offered the Green Deal?

Green Deal Providers offered all the services you need for a Green Deal package - arranging assessment, finance quotes and arranging installation.

But you could choose to use a different company for each service.

Interest rates

The interest rate you got depended on which energy efficiency measures you chose to install, how much finance you required, which provider you used and how long you chose to spread repayments for.

On average providers were expected to charge around the 7% mark.

Were there any incentives for getting a Green Deal loan?

The Government set up a Green Deal Home Improvement Fund, which offered up to £7,600 worth of vouchers to go towards the cost of installing energy efficient improvements.

You could get back 75% back on the cost of installing solid wall installation ( up to £6,000 ).

In addition, you could get up to a total of £1,000 towards the cost of installing any 2 of the following:

• a condensing gas boiler on mains gas
• double or triple glazing as a replacement for single glazing
• secondary glazing
• replacement doors
• cavity wall insulation
• floor insulation
• flat-roof insulation
• insulation for a room in the roof
• a replacement warm air unit
• replacement storage heaters
• flue gas heat recovery units
• a waste water heat recovery system

You’d get up to £500 more if you applied within 12 months of buying a home.

What if I want to switch energy supplier?

You are free to switch energy supplier but only to another electricity supplier that is participating in the Green Deal.

What if I move home?

If you move home before the loan has been paid off then the idea is it remains on the bills and has to be paid by the new householder. However, in reality, the buyer may ask you to pay off the Green Deal loan before they purchase your home. This could incur a high early repayment charge, so if you are planning to move in the future make sure you factor this in to your calculations.

Shopping around

Shopping around before signing up was a good idea, as some companies did not charge you up-front, but only if you then committed to them doing any work.

Assessment costs also varied.

Paying for improvements another way

There are other ways to pay for energy efficiences. If you have enough savings, you can pay for them upfront.

You could also spread the cost interest-free over up to 24 months via a 0% purchases credit card. You may also be able to increase the size of your mortgage, at a lower interest rate than offered by the Green Deal.

Or you may even find a personal loan is cheaper in terms of the interest rate, although you won't have as long to pay it back as you would have done via the Green Deal and you need to watch out for any other fees.

With any of the above options, you will have greater flexibility to shop around for a company to carry out your improvement works.

Help for people on low incomes

If you're on a low income or benefits, you could be entitled to free improvement work. Read How to get free cavity wall and loft insulation and How to get your boiler repaired or replaced for free for more information.

Advice on energy efficiency

If you want help and advice on energy saving and information about schemes you may be eligible for, you can call the impartial Energy Saving Advice Service on 0300 123 1234 if you live in England, Wales or Northern Ireland. Calls are charged at standard national rates.

If you live in Scotland, call your local Energy Saving Scotland advice centre free on 0808 808 2282.

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