The world is heavily dependent on energy sources which have created a severe increase in energy bills. People are looking for energy-saving sources through which they can save money. In the UK, the citizens learn more about energy efficiency through renewable sources like solar energy, wind power, bioenergy, etc.

As of 2018, UK has generated renewable energy shares of 33% and has been on constant growth.

To help the people with their energy-saving activities, the Government is also introducing new grants and schemes. One such scheme is the Green Deal Scheme which saw much effectiveness during its run.

Even though the Green Deal Scheme is no longer existent, citizens are still benefitting from it. The scheme helps with improvements to your home and makes it more energy efficient. Check out the guide below to know about the Green Deal Scheme.

What Is The Green Deal Scheme?

The Green Deal Scheme is a UK government initiative to see a growth in the energy efficiency of the British private and public sectors. This scheme was initially proposed as the Coalition Government’s Energy Bill centrepiece in December 2010.

Roof Solar PanelsThrough this scheme, private energy organizations will provide structural and home improvements to commercial and domestic customers.

The structural improvements can be wall insulation, cavity wall insulation, solid wall insulation, loft insulation, double glazing, draught-proofing, etc. Overall, the Government provided loans to customers for energy-efficient home improvements. The owners would pay these loans back from the energy bills savings.

The Green Deal was officially launched in 2013 and removed or reduced any upfront cost required for energy-saving installations. This was a pay as you save package, making it easier for the customers to shift to green energy.

How Does The Green Deal Scheme Work?

The Green Deal scheme is not like a standard loan where the loan owner has to repay it till the end. Since the scheme is on properties, the property’s current owner will need to pay off the loan. This means if you have applied for the Green Deal Scheme, you need to repay the loan till you are the owner of the house.

If you sell your house during the loan period, it will be transferred to the new owner or the bill payer. The owner will also get the benefits of living in an energy-efficient house.

The repayments of the Green Deal loans are connected to the electricity meter of the owner. Owners will see a charge on their bills till they have paid off the loan.

What Is The Golden Rule?

The core of the Green Deal Scheme is based on the Golden Rule. According to the Golden Rule, the loan repayment should not be more than the amount that the customer has saved on their fuel bills. This is after they have taken energy efficiency measures at their home.

The loan will cover only what a particular measure’s saving is predicted to be. This means if the installation cost is more than the lifetime savings, it is the responsibility of the owner to fill the difference.

It was anticipated that the Golden Rule would not hurt the property’s value. However, the Golden Rule was not a good factor in real-life scenarios since many houses did not have enough energy savings to pay for the loan.

Does The Green Deal Scheme Still Exist?

The Green Deal Scheme ran between 2013 and 2015 but was later stopped. The UK government stopped funding when issues related to the scheme arose extensively. Since the Green Deal Scheme was linked to the house and not to the owner, it wasn’t easy to sell it.

Moreover, it was not the right scheme for all homes. Some houses do not have abundant energy usage. This means the saving was not as much to make the repayment. Hence, it became a costly affair for those households.

The UK government stopped this scheme in 2015 since the funding was for only 15,000 Green Deal loans from its initiation in 2013. This was very low and crushed the expectations of the Government. However, there are still certain existing users running on the loan and making repayments for the same.

What Do The Green Deal Loans Cover?

Earlier, the Green Deal had several measures which were eradicated after its closure in 2015. However, a small range of measures will be available to the owner for those who applied for the loan before the closure.

These energy efficiency measures covered by the Green Deal loan are as follows –

  • Replace or new boiler installation
  • Biomass boiler
  • Cavity wall insulation
  • Floor insulation
  • Solid wall insulation
  • Loft insulation
  • Double glazing
  • Draught proofing
  • Storage heaters with fan assistance
  • Lighting, heating, and hot water controls
  • Heat pumps for air and ground source
  • Recovery device from flue gas
  • Innovative technologies like wastewater heat recovery systems

You will need to use a provider or installer approved by Green Deal to get the loan.

What Happens If You Have An Existing Green Deal Loan?

After the Government stopped funding the Green Deal Finance Company in 2015, they offered no loans to the customers for two years. However, the Green Deal Finance Company started funding selected home improvements in 2017. Several private investors backed the project.

The Green Deal Finance Company gave the funding for the small range of measures that are mentioned above. This means several people still have existing Green Deal Loans either after 2017 or before the original closure in 2015.

If you have an existing loan, these are some steps you need to follow.

Early Loan Repayment

Solar Panels on RoofThe Green Deal Finance Company stated they were removing early-repayment fees for the loans taken post-May 2014. However, people who took a loan prior to this date could still repay the loan early but have to pay a fee.

If the loan amount is less than £8000 and spread over 15 years or less, the owner will not pay any repayment fee. As the Green Deal Finance Company mentioned, anyone who does not fall under these categories will need to provide an early repayment fee.

Check Warranty

Most of the measures offered by Green Deal have a minimum warranty of five years. There is also an extended guarantee of 10 years that covers building damage incurred during the installation of the measures.

The providers need to have guarantees for building damage and home improvements for 25 years to measure cavity wall insulation and solid wall insulation. If you find a problem after the warranty period has expired, you will need to repair it out of your pocket.

If you have an existing loan, it is better to re-read the loan and see the warranty period. You do not want the burden of a non-functioning product and pay for its repairs.

Selling or Buying A House

One of the main reasons for closing the Green Deal was problems in selling the house. Many new owners did not see Green Deal as a sustainable scheme and avoided buying houses under the scheme.

If you have an existing loan and want to sell the house, you must disclose the Green Deal loan to the new buyer. The buyer might not be comfortable with this deal, in which case you need to come to a negotiation or make an early repayment.

The same rule applies when you are buying a new house. It is essential to know that a house under the Green Deal will seek electricity payment from the owner at the time. This means the previous owner of the house may have taken the loan for home improvements.

However, when you buy the house, the loan will be transferred to you. Therefore, you will need to make any payments related to the Green Deal loan.

The person who buys the new house will need to ask for complete information related to the Green Deal loan. If a small family with low energy usage, the loan or the installed solar measurements might not have any usage.

Switch Energy Companies

One of the perks of having a Green Deal loan is the accessibility of switching energy providers. This deal was linked with big energy providers such as Npower, SSE, British Gas, Scottish Power, Eon, and EDF.

If you are not satisfied with your current energy provider, you will find many other big names. However, you will need to learn all the essential terms and conditions related to switching energy providers.

Make sure you are satisfied with the conditions; otherwise, you may be stuck with another energy provider who is not suitable.

Is There An Alternative For The Green Deal Scheme?

There were several alternatives initiated by the Government in England, out of which the Green Homes Grant Scheme gained the most popularity. It was launched in September 2020 to help homeowners make their houses more energy-efficient. The focus was also on decreasing their energy bills and toxic emissions.

This grant was for £1.5bn and wanted to make improvements to 600,000 homes. The Green Homes Grant Scheme was supposed to run till 31 March 2022. However, it was closed on 31 March 2021, a year prior to its original closing date.

The Green Homes Grant was only available in England. It was not applicable for citizens of Scotland, Northern Ireland, and Wales.

Why Was The Green Homes Grant Scheme Closed?

Like the Green Deal Scheme, the Green Homes Grant Scheme was closed before its original end date. For starters, the grant promised home improvements for 600,000 homes. However, only 10% of the numbers promised were done to date.

Several homeowners complained about the application process and the slow administration process. There was a delay in voucher distribution, and the design for the scheme was done in a hurry.

Due to this, the Green Homes Grant was plagued with several issues that ultimately led to its closure. The Government promised to honour the applications made before the closure date. This meant you could make energy-efficient improvements to your home if you applied for the Green Homes Grant before 31 March.

What Was Covered Under The Green Homes Grant?

Solar Panel InstallerThe Green Homes Grant was slightly different from the Green Deal in terms of coverage. Through this grant, homeowners could apply to a maximum of £5,000 vouchers for primary home improvements. The home improvement measures were a heating system with low-carbon such as ground source or air source heat pump. It also covered insulations.

Homeowners who belonged to low-income households could apply for a maximum of £10,000 vouchers. These homeowners did not have to provide any amount to the cost.

The other vouchers provided an amount for two-thirds of the improvement costs. You could also apply for vouchers for secondary measures. However, for this, the homeowners need to have remaining money after the primary measure application.

The secondary measures were draught-proofing, heating controls, double glazing, triple glazing, and replacing energy-efficient doors. Moreover, solar thermal panels were covered in the Green Homes Grant.

The measures not included in the grant were solar photovoltaic panels and gas boilers.

Available Energy Efficiency Schemes

Homeowners will find several energy efficiency schemes to make home improvements. One of these schemes is the Renewable Heat Incentive scheme. However, this scheme will be replaced in 2022 by the Clean Heat Grant.

The schemes that are being newly introduced focus on providing homeowners energy savings for the long term. It also works on the mistakes made in the previous schemes.

Summing Up

The Green Deal Scheme was introduced to maintain a positive outlook towards the concept of clean and green energy. However, the Government failed to maintain the scheme for a long time due to several issues.

After this, many other grants were initiated by the Government, out of which the Green Homes Grant seemed to be beneficial to the homeowners. However, the Green Homes Grant also failed to work mainly due to the fewer applications than what the Government initially promised.

The grant was also only for citizens of England and not for other parts of the UK like Northern Ireland, Wales, and Scotland.

Despite multiple failures, the Government continues to launch new grants and schemes that would benefit you while improving your home. This ensures that people who wish to live a greener life would find energy savings solutions provided by the Government.