subject: Understanding The Green Deal Finance Mechanism [print this page] The concept of the Green Deal is simpleThe concept of the Green Deal is simple. Homeowners and businesses can have energy efficiency improvements made to their properties at no upfront cost and the savings made on those improvements pay off the cost of the work done. In practice, as with most novel ideas, its more complicated. The money to pay for the improvements will, in large part, come from private finance. This means that a commercial rate of interest will apply. The rate of interest will be between 7 and 8%. Perhaps prohibitively high for some, but the reason for that is because it needs to account for the cases of non-payment or 'voids' as well as the layers of repayment processing involved.
The mechanism for repayment is quite complex and involves a number of stakeholders. The tenant of the property will repay the G.D. charge through the electricity bill as opposed to the gas bill, even though the savings will, in large part, come off the gas bill. This is due to the simple fact that 99.9% of the population are 'on grid', whereas there are those without mains gas. The charge is itemised as a separate charge on the bill and will remain fixed throughout the life of the finance. This money is then transferred from the utility company to the G.D Provider who has already paid the Certified GreenDeal Installer for the work.
Some Providers such as British Gas will be charging 99 for a G.D. assessment, but many may be offering them for free as a loss leader as there is no guarantee that the Green Deal will be taken up.
The consumer protection is of paramount importance and there are a number of checks and balances in place to ensure this. The first is that the GreenDeal Installers carrying out the work will have to be certified and badged with the 'Green Deal Approved' logo. They will have to have rigorous quality standards in place and a minimum of 2m public liability insurance. They will have undertaken specific G.D. training in areas that require that and all of their operatives will have to be aware of strict levels of customer care and communication. There is, in fact, a brand new standard under which they operate called the PAS 2030.
Consumers will have one port of call for any issues and complaints - the 'GreenDeal Provider'. Rather than them chasing the installers, they will be confident in the knowledge that throughout the term of the finance they will be able to deal with the same company. All GreenDeal Providers will have to go through rigorous quality assessment and all sign up to a Code of Conduct. There are currently 10 approved Greendeal Providers but there are expected to be many more before the beginning of February 2013, when the scheme really starts.
So the Green Deal, although complex to deliver, may well provide our homes and businesses with the extensive improvements they need and at the same time lift many out of fuel poverty.
by: greendealmanager
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