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Financial Support for Insulation and Domestic Renewables

This page summarises various schemes to help make insulating your house and installing efficient, renewable energy sources more affordable.

Latest news

The Department of Energy and Climate Change (DECC) has launched the Renewable Heat Incentive (RHI) to encourage solar hot water, heat pumps, and biomass sources of heating. After some delays the first phase, for large-scale systems, started in November 2011. For domestic users the scheme finally started up in April 2014. However, systems installed from July 2009 onwards are eligible for RHI payments. (The interim Renewable Heat Premium Payments ended in March 2014). The scheme covers solar hot-water panels, ground-source and air-source heat pumps, and biomass boilers. See below for up-to-date information.

The government’s Green Deal, the new centre-piece of the programme to upgrade the energy efficiency of the UK’s housing, is now running. We have an introduction to this complex loan scheme below. In order to help the scheme get started, there is a cashback deal for early adopters that has recently been extended and improved. Other grant schemes have now ended, including the Warm Front scheme for people on benefits.

DECC introduced a Feed-in Tariff in April 2010. This encourages installation of renewable technologies: solar photovoltaic panels, small wind turbines, small-scale hydro, etc. However, there have been major reductions and new restrictions in the Feed-in Tariff for solar photovoltaic systems. See below for up-to-date information.

Grants for Insulation and Energy Improvements

Cavity wall insulation

Insulating your home, which is often a simple matter of loft and/or cavity wall insulation (photo at right) and draught-proofing, is the most effective way to save energy and reduce your bills. (Photo at right shows installation of cavity wall insulation.) These can also reduce condensation and mould. Other measures include installing an energy-efficient condensing boiler, jackets for hot water cylinders, insulating pipes, using reflective radiator panels, installing individual thermostatic radiator valves and installing double glazing.

However, the system of grants for free or inexpensive installation of cavity wall and loft insulation that was funded by the energy companies finished at the end of 2012. The Warm Front scheme for people on benefits ended as well. The main programme of financial aid for the future is the government’s Green Deal, which started in January 2013. You can find information below about the Green Deal. Early users of the Green Deal are being offered a cashback bonus to help this complex programme get started.

For people who are older, have low incomes or are otherwise vulnerable there are a few schemes to help with fuel bills and make improvements. These are described below, along with information about new obligations for landlords of privately rented accommodation concerning energy efficiency.

The Warm Home Discount scheme

For winter 2013–14, vulnerable people (e.g. older or low income) could get a one-off £135 discount on their electricity bill from energy suppliers. Ask your energy supplier, or check your eligibility at:
www.gov.uk/the-warm-home-discount scheme/eligibility

The Affordable Warmth Obligation

This exists to provide heating and insulation improvements (cavity wall and loft insulation, and replacement boilers) for low-income and vulnerable households, not including those in social housing. There are complex eligibility criteria for this means-tested scheme. Call the Energy Saving Advice Service on 0300 123 1234 to check whether you might be eligible, and to apply if you are. There is more information at:
www.affordablewarmthscheme.co.uk

Affordable Warmth Network

If you are having trouble paying your energy bills, ring the Affordable Warmth Network on 0800 107 00 44. There is more information at:
www.wospweb.com/site/Thames-Valley-Energy-Advice-Centre

Cold weather payments

If you’re getting certain benefits, you may be eligible for these when your local temperature is either recorded as, or forecast to be, an average of 0 °C or colder for at least seven consecutive days. There is a payment of £25 for each seven-day period of very cold weather between 1 November and 31 March. You can check if your area is due a payment at:
www.gov.uk/cold-weather-payment

Warming by the fire

Getting your private sector landlord to make energy improvements

Many energy improvements are the landlord’s responsibility so you will need to ask your landlord to do them, or get their written permission to do them yourself. The first step is to talk amicably to him/her. Landlords will not benefit financially from lower energy bills, and so may be reluctant to make improvements. However, you may be able to persuade them that it is in their interest to do so by telling them about the financial incentives available to them, such as the Landlord’s Energy Saving Allowance and the Landlord Green Appliance Scheme, as well as the Green Deal.

You can also alert your landlord to their existing and future legal responsibilities, and mention that energy efficiency improvements usually help preserve the fabric of the property. You can download a template letter to your landlord from the Energy Saving Trust. From April 2016 landlords will not be able to refuse reasonable requests from tenants to improve their property.

Local Authorities have a duty to take action against landlords under the Housing Act 2004 if the condition of a property affects the health of the most vulnerable occupier. Issues relating to household energy efficiency include excess cold, damp and mould, excess heat, carbon monoxide, uncombusted fuel gas from faulty appliances and faulty appliance wiring. If a landlord fails to give permission to have grant-funded energy efficiency measures installed, tenants can complain to the Environmental Health Department of their local authority. If landlords do not comply, they can be prosecuted and the local authority can carry out the repair work itself.You can telephone Environmental Health in the Vale of White Horse on 01235 540 555, or email env.health@whitehorsedc.gov.uk.

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Financial Support for Renewable Generation

This section covers the UK’s provisions for supporting domestic (i.e. small-scale) renewable energy generation: the Feed-in Tariff begun in April 2010 to pay for electricity generation, and the (long delayed) Renewable Heat Incentive to help pay for producing heat and hot water, which started in April 2014. More detailed information may be found on the Department of Energy and Climate Change (DECC), Energy Saving Trust, and OFGEM websites.

Feed-in Tariff (FiT)

The Feed-in Tariff aims to increase small-scale (up to 5 megawatts) electricity generation in the UK. It has already shown that by expanding the market, expensive technologies such as solar photovoltaic panels have become cheaper. The scheme, which started in April 2010 and will run for at least 20 years (25 for some solar photovoltaics), covers a range of technologies.

What makes the FIT unusual, compared to schemes in other countries, is that it rewards all generation, not just what is exported to the grid. The reasoning behind this is that electricity used locally does replace energy from the grid, and is efficient because it reduces losses in transmission. It also makes consumers more aware of how they use their energy and so, hopefully, leads to lower consumption.

The FIT replaced the up-front grants from the Low Carbon Buildings Programme. The Renewable Obligations programme, which is primarily aimed at large-scale generation, no longer covers domestic systems. Systems installed before July 2009 were transferred to the FIT, but receive a uniform low tariff because the FIT aims to encourage new systems, not reward existing ones.

Installing solar PV panels

General points

The electricity generating technologies covered are:

  • solar photovoltaic panels (photo shows installation in Blewbury during a November gale)
  • wind turbines
  • small-scale hydro
  • anaerobic digestion
  • micro combined heat and power (small-scale pilot programme, limited to 30,000 installations)

The tariffs differ between different technologies, and for different-size systems – they are higher per kilowatt-hour (kWh) for smaller systems. The tariff for a particular system is fixed at the time of installation and then is indexed for inflation. However, as time goes on and the cost of the systems (hopefully) decreases the tariffs for new installations will be reduced – this is called ‘degression’. There will be periodic reviews of the operation of the scheme and the tariffs being paid. Payments are tax free.

The Energy Saving Trust has a simple calculator to allow you to estimate how much you would get under the Feed-in Tariff.

Both the system components and the installer must be approved under the Microgeneration Certification Scheme. In its original form, other measures to reduce energy consumption (insulation, heating controls, lighting) were not a requirement for receiving the FIT. However, since April 2012 properties installing solar PV must have Energy Performance Certificate (EPC) ratings of at least D in order to get the full tariff; otherwise they will get much less. However, this requirement does not apply to other technologies.

The register of installed systems is held by OFGEM. Payment is made by electricity suppliers and comes from them, not from the government.

 

Table of tariffs

A condensed table of Feed-in Tariffs for domestic-scale installations follows. These rates, for 2014–15, include annual inflation indexing. Exports to the grid from older systems get an extra 3.39p per kWh, while systems registered from late 2012 (marked with a *) get a higher rate of 4.77p per kWh. Systems on output boundaries will get the higher rate. A table with full details, including larger systems, may be found here.

Technology Output Tariff
(p/kWh)
Lifetime
(years)
Hydro: reg. before 1/12/12 ≤ 15 kW 23.19 20
Hydro: reg. from 1/12/12 ≤ 15 kW 22.23* 20
Hydro: reg. from 1/4/14 ≤ 15 kW 21.12* 20
Micro-CHP pilot: reg. before 14/3/13 ≤ 2 kW 11.65 10
Micro-CHP pilot: reg. from 15/3/13 ≤ 2 kW 13.24* 10
Solar PV (retrofit): reg. before 3/3/12 ≤ 4 kW 48.07 25
Solar PV (new build): reg. before 3/3/12 ≤ 4 kW 41.93 25
Solar PV: reg. from 3/3/12 ≤ 4 kW 22.23 25
Solar PV: reg. from 1/8/12 ≤ 4 kW 16.95* 20
Solar PV: reg. from 1/11/12 ≤ 4 kW 15.86* 20
Solar PV: reg. from 1/7/13 ≤ 4 kW 15.30* 20
Solar PV: reg. from 1/1/14 ≤ 4 kW 14.90* 20
Solar PV: reg. from 1/4/14 ≤ 4 kW 14.38* 20
Solar PV: reg. from 1/4/12; EPC < D ≤ 4 kW 9.53 25
Solar PV: reg. from 1/8/12; EPC < D ≤ 4 kW 7.52* 20
Solar PV: reg. from 1/11/12; EPC < D ≤ 4 kW 7.29* 20
Solar PV: reg. from 1/5/13; EPC < D ≤ 4 kW 7.03* 20
Solar PV: reg. from 1/1/14; EPC < D ≤ 4 kW 6.61* 20
Wind: reg. before 1/4/12 ≤ 1.5 kW 40.12 20
Wind: reg. from 1/4/12 ≤ 1.5 kW 37.91 20
Wind: reg. from 1/12/12 ≤ 100 kW 22.23* 20
Wind: reg. from 1/4/14 ≤ 100 kW 17.78* 20
All installed before 15/7/09 10.49 To 2027

Feed-in Tariff news and current status

The FIT scheme for solar PV was very successful initially, with many more installations than predicted. This was because the tariff had been set quite generously, combined with falling costs for solar panels. DECC responded with a series of reviews to reduce the payments – these were held earlier than had been promised.

PV roof

The first review concerned very large PV systems of over 50 kW. Many of these were being installed on community buildings such as schools and village halls. However, because the FIT gave a good return on investment, some companies had been installing very large systems for profit, often on farmland. In March 2011 DECC announced an immediate, huge reduction in the FIT for new large systems, e.g. systems from 250 kW–5000 kW reduced from 30.7p per kWh to 8.5p per kWh. DECC said that this was to stop these large systems getting a disproportionate share of the FIT funding. However, the cut was so big that it discouraged almost all plans to build such big systems, including many community projects. The solar PV industry said that such a big change without warning made it impossible to plan for the future or to obtain loans to finance expansion.

During 2011, the cost of PV systems fell and people also anticipated the reductions in the tariff that had been scheduled for April 2012. This produced a surge in new systems. On 31 October 2011, without warning, DECC launched an early review of FITs for domestic systems. They claimed that the large number of installations was going to cost too much over their 25-year lifetime and that reduced prices meant returns on investment were much higher than expected. DECC proposed to cut the tariff for new systems (but not existing ones) by more than half, and make other drastic changes such as requiring properties to achieve an energy performance rating of at least C. The lower rate was to apply to properties registered from mid-December 2011, before the consultation had even closed. (Our response to that consultation is here). DECC were taken to court and the retrospective date was ruled illegal; a series of appeals were all turned down but caused nearly five months of chaos and confusion for consumers and for the solar PV industry.

The result was to delay the effective date of the new, much lower tariff (21p per kWh) to March 2012. In addition, properties registered from April 2012 are required to have an energy efficiency rating of at least D. (The original proposal was to require a rating of C. This would have excluded a huge number of houses, especially older ones, so it was important to campaign for a less restrictive requirement. There's a brief explanation of the rating system here.)

However, even before these measures took effect, DECC launched another consultation proposing major changes to the future operation of the solar PV tariff. The result was an even lower tariff for new domestic systems of 16p per kWh starting in August 2012, with continuing reviews (aimed at reducing the tariff further, and based on sales of PV systems) every three months – the higher the sales the bigger the reduction. If the energy efficiency requirement of D is not met these sytems get a lower rate of 7.1p per kWh. In addition, the lifetime of the tariff for these systems was reduced from 25 years to 20 years. On the other hand, there were some improvements on the original DECC proposals: indexation of the tariff with inflation will be retained, and the export tariff for these new systems will be higher, at 4.5p per kWh. Installations of more than 25 systems (e.g. community schemes) will get 90% of the full tariff rather than the 80% introduced in the first review.

In parallel, another review looked at the FIT for other types of electricity generation. Unlike solar PV, the other technologies have had fewer systems installed than had been predicted, and the proposed changes in the level of the tariffs are not drastic. Reviews for these technologies will take place once per year.

Rent-a-roof schemes

The initially generous Feed-in Tariff terms led a number of firms, including British Gas, to make what sounded like an attractive offer. They will install solar panels on your roof free of charge, and any of the generated electricity that you use will save you the cost normally paid to your electricity supplier. They claim savings of up to £150 per year.

These offers are not as good as they sound:

  • You do not own the panels, and they must stay on the roof for 25 years and be sold along with the house. There have been reports of problems with mortgages due to this.
  • The installer is collecting the full Feed-in Tariff, which for the fairly large systems they propose might be worth as much as £600–700 per year even with the latest, reduced tariff.
  • Their estimate of how much of the electricity you would be able to use assumes that your household uses quite a lot of electricity during the day rather than at night. But if everyone is at work or school most of the electricity generated will be exported to the grid, and it's quite likely that you will save less than £100 per year.

To estimate how much you might get from your own panels under the Feed-in Tariff, use the Energy Saving Trust's calculator.

The late-2011 review of the tariffs reduced the rate of FIT for anyone owning 25 or more systems to 80% of the new, much lower rate. In August 2012 this changed again to 90% of the tariff, which at the same time was greatly reduced. The effect of the much-reduced feed-in tariff on rent-a-roof schemes has been that they have almost disappeared.

* Although we welcome the use of renewable energy wherever possible, we believe that if you can manage to pay for solar panels yourself, or even if you can borrow the money at a low interest rate, then you would be better off buying the panels yourself and benefiting from the full Feed-in Tariff, which provides an index-linked and tax-free income for 20 years.

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Renewable Heat Incentive (RHI)

The Renewable Heat Initiative (RHI) is aimed at a range of technologies and systems, small and large, and is for individual owners and landlords in both private and social housing as well as community groups and businesses of all sizes. The short-term target is for 15% of all UK energy consumption (almost half of which is for heating) to be from renewable sources by 2020. The RHI will try to help with that by making renewable heating a reasonable investment. Other goals include lowering the prices for renewable systems by expanding their markets, and increasing the UK’s energy security by reducing dependence on imported fossil fuels. Here we will cover the small-scale, domestic proposals of the RHI.

The RHI for large-scale systems started up in November 2011. However, take-up has been lower than predicted. For domestic users, start-up was first delayed to October 2012, delayed again to summer 2013, and finally started in April 2014. However, due to the delays, ‘legacy’ systems installed from 15 July 2009 onwards are eligible for the RHI payments. (Applications from those who installed before April 2014 may be phased over time to help manage the potentially large backlog of applications submitted when the scheme opens.)

The RHI is said to be a world first. This means that, unlike the Feed-in Tariff, there were no models elsewhere from which to gain experience, and is part of the reason for the delays. It is also likely that as things progress changes will occur. In addition, the money for the scheme is going to come from government funds (unlike the Feed-in Tariff) and so is limited by the cuts in public funding.

Installing ground-source heat pump

With the exception of solar thermal panels, which are treated as a special case, the main thrust of the scheme concerns domestic central-heating boiler replacements. The tariffs are therefore aimed at reimbursing the extra cost of renewable technologies compared to buying a replacement boiler. The scheme is available for all homes, both on and off the gas grid. However, homes not on the gas grid and using oil, coal and electric heating will benefit more from switching to renewables because they have higher heating bills. Oil and coal also have higher carbon emissions than gas. So although available to all, DECC says that the RHI is mainly targeted at homes that are not on the gas grid. The initial aim is to support around 750,000 renewable heating systems through the domestic RHI by 2020.

As an interim measure while the RHI was delayed, Renewable Heat Premium Payments were provided until March 2014. Most people who received Renewable Heat Premium Payments are eligible for RHI support.

Domestic technologies covered

The heat-producing technologies that are covered by the Renewable Heat Incentive for domestic installations are:

  • solar thermal panels
  • ground-source heat pumps (photo at right shows ground-source pipework)
  • air-source heat pumps, but only air-to-water not air-to-air, and only for heating not cooling
  • solid biomass boilers, and wood stoves provided they have back-boilers

Other technologies that might have been included but are not include air-to-air heat pumps, geothermal energy, renewable combined heat and power, biogas and bioliquids. (Some of these are more appropriate for large-scale use.)

Only one of the ‘boiler-replacement’ technologies may be installed in a property, but it is permitted to also install solar thermal panels and receive the tariffs for both systems.

General information

The small-scale RHI covers single domestic dwellings, and is open to owner-occupiers, private landlords, providers of social housing, third-party owners of heating systems and self-builders. It will not be open to new build properties other than self-build. There is more information on the scheme at www.ofgem.gov.uk/domestic-rhi.

Both the system and the installer must be approved under the Microgeneration Certification Scheme. The RHI will be administered by OFGEM.

Before applying for RHI support, all applicants, including those with eligible systems installed since July 2009, will need to have a Green Deal Assessment carried out to find out which energy-efficiency measures are cost-effective for the property. Loft insulation (to 250mm) and cavity-wall insulation must be installed where these measures are recommended by the assessment. If the the required loft and cavity wall insulation are yet to be installed, an updated Energy Performance Certificate (EPC) must obtained as proof of installation (or valid evidence provided to show why installation was not feasible).

Finance for the up-front costs of the renewable technology (in the form of long-term loans) will sometimes be possible via the Green Deal.

In order to minimise air pollution, new biomass systems must comply with limits on harmful particulate and nitrogen oxides emissions. Legacy biomass installations (installed between July 2009 and spring 2014) will not have to meet these requirements. RHI biomass recipients will have to make an annual declaration that they are using only approved fuel from a supplier registered on an approved supplier list (not yet set up, but promised for April 2014), and keep receipts as evidence for future audits.

 

Tariffs

Diagram of a log boiler

The tariffs below will be paid quarterly for seven years.

  • Solar thermal panels: 19.2 pence per kilowatt-hour
  • Biomass: 12.2 pence per kilowatt-hour (diagram shows a log boiler)
  • Air-source heat pump: 7.3 pence per kilowatt-hour
  • Ground-source heat pump: 18.8 pence per kilowatt-hour

For solar thermal systems the renewable heat generated will be based on an estimate of system performance, done as part of a Microgeneration Certification Scheme installation. A typical system might produce 1200–1500 kilowatt-hours of energy per year, which would mean payments of £230–£290 per year.

For biomass the renewable heat generated will be based on an estimate of heat demand from an Energy Performance Certificate (EPC). A small house might use roughly 12,000 kilowatt-hours per year for heating while a large one might use 20,000 kilowatt-hours, so the annual payments might be about £1460 and £2440 per year, respectively.

For heat pumps the renewable heat generated will be based on an estimate of the heat demand from an EPC combined with an estimate of the heat pump’s efficiency. A medium-size house with an air-source heat pump, needing heat energy of 15,000 kilowatt-hours per year, might get about £680–£780 per year. A similar house with a ground-source heat pump might get somewhere in the range of £1750–£2000 per year. Note that only heat pumps with a Seasonal Performance Factor (SPF) of 2.5 and above are considered renewable in the EU and eligible for the RHI.

Tariff details

It is important to note that for those who received Renewable Heat Premium Payments, the tariff payments will be reduced pro rata so that over the seven-year duration of the tariff the Premium Payments are paid back. This is to avoid a double subsidy, and in effect turns the Premium Payments into zero-interest loans.

As with the Feed-in Tariff, RHI tariffs will change annually in line with the Retail Price Index. DECC will also introduce a system of ‘degression’ to control the costs of the RHI by periodically reducing the tariffs for new applications to the scheme – this will not apply to those already receiving payments.

Heat metering

To help improve performance of renewable heating systems, there will be an extra incentive of £230 per year for heat pumps and £200 per year for biomass boilers for applicants who install metering and monitoring packages.

For houses that have a back-up heating system such as an oil boiler, and for second homes, metering systems will be required.

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Installing roof insulation

The Green Deal

The Green Deal is promoted as the centre-piece of the government’s programme to upgrade the energy efficiency of the UK’s housing stock. The Green Deal basically consists of a low-interest long-term loan to help pay for various improvements such as insulation (including solid walls) and renewable energy generation. The loan is provided by the private sector from a central fund – very little government money is involved. The loans are paid back via electricity bills, in amounts claimed to be no more than the resulting savings on energy bills. An important benefit is that homes would be wamer and more comfortable. In order to help the scheme get going, there is a cashback deal offered to early adopters which we describe below.

Part of the appeal will involve the domestic Renewable Heat Incentive (RHI, see above), which is starting much later than planned for domestic properties. The RHI will provide continuing payments for such things as solar thermal hot-water panels and heat pumps.

An important feature of the scheme is that a large take-up from community groups and social housing is hoped for. This will not be discussed here, as this page mainly concerns privately owned housing. Social housing providers are, or should be, developing strategies to use this scheme to benefit their tenants. If you live in social housing you should contact your housing association for more details specific to your circumstances.

The government has acknowledged that the scheme is very complex, and so will take some time to get going properly. After a year of operation they also said it would be modified in the light of experience. An important factor is that it aims to let the market decide on what deals to offer. For example, some firms might offer very low (or no) interest on the loans, although so far the typical rate is 8%. A wide variety of important questions and critical points have been raised about the Green Deal, and even the scheme’s supporters are now cautious about how successful it will be. One of the big issues is how effective the planned system of regulation and controls will be.

How it works

Consumers start by arranging a survey by a Green Deal assessor, who then suggests how best the property can be improved. An Energy Performance Certificate assessment is part of this. The criterion for granting a loan, called the ‘golden rule’, is that the estimated savings on bills should exceed the cost of the work to be done. There is a long list of measures covered (see below), but improved insulation and new boilers will feature most frequently. The installation firm informs the electricity supplier, so that the loan repayments can be added to electricity bills.

The government aimed for a nominal interest rate of 6.9%. However, providers set their own rates, typically 8%. It might well turn out to be cheaper to borrow the money outside the scheme and pay up-front, especially as this avoids the complications outlined below.

The length of the loans will vary depending on the type of work selected and its potential impact on bills. Very expensive work, such as solid wall insulation, a new boiler or double glazing, may require a partial up-front payment.

The loans remain with the property, so purchasers of the property have to take on the obligation. This might be a serious cause of problems when selling the property.

Although some firms may offer deals that include things like free assessments, fees and prices are not fixed in any way and consumers will have to sift through a variety of plans from different companies to see what is included and what the total costs and rewards will be.

Companies selling Green Deal products must be accredited, and their staff trained. The aim is to try to avoid the mis-selling and dodgy practices that have occurred in selling energy tariffs, insulation, and solar thermal and photovoltaic panels. There will be an ombudsman service to deal with complaints.

What is included

A large number of improvements are eligible:

Installing internal wall insulation
  • air and ground source heat pumps
  • gas and oil condensing boilers
  • biomass boilers and room heaters with radiators
  • under-floor heating and insulation
  • micro combined heat and power
  • central heating controls
  • heat recovery devices for flue gases and for waste water from showers
  • hot water cylinder insulation and cylinder thermostats
  • cavity wall insulation
  • loft, rafter and roof insulation (photo at right above: installing roof insulation)
  • external and internal solid wall insulation (photo at right: installing internal wall insulation; photo below: external wall insulation)
  • draught-proofing and high thermal performance external doors
  • energy-efficient glazing
  • efficient lighting systems, fittings and controls
  • micro wind generation (also covered by the Feed-in Tariff)
  • photovoltaic panels (also covered by the Feed-in Tariff)
  • solar water heating

 

Initial cashback offer

In order to help the Green Deal get started, the government offers a cashback deal for early users. Due to the poor Green Deal take-up in its first year, the cashback offer has been extended to June 2014 and payments for some measures improved. Cashback is now capped at two-thirds of the costs of the work (it had been 50%). The new, higher rates apply to improvements made after 13 December 2013.

Examples of the maximum payments for various items include: £150 (was £100) for loft insulation, £250 for cavity-wall insulation, £4000 (was £650) for solid-wall insulation (but you must insulate at least 50% of the wall area), £50 for draught proofing, £310 for a new (condensing) oil boiler, £270 for a new (condensing) gas boiler, £70 for new heating controls, up to £650 (was £320) for double or triple glazing (depends on window area) and up to £500 (was £230) for secondary double glazing (depends on window area).

The cashback is open to any householder making energy saving improvements, including owner-occupiers, people renting privately or in social housing. Landlords, both private and social, are also eligible where they pay installation costs. To qualify you must have a Green Deal Assessment carried out and then get quotes from a Green Deal provider before applying for a cashback voucher. Some providers will be able to apply for you. The work must be completed by a Green Deal provider within a specified period.

You can only make one cashback claim, but it could cover a full package of improvements recommended by the Green Deal Assessment – the more improvements that you make, the bigger the cashback. Note that if the Green Deal Assessment recommends loft or cavity-wall insulation, the cashback will only be paid if these are done as well.

There is no requirement to actually take out a Green Deal loan – the requirements are to get the Assessment and the work done by Green Deal providers. It appears that almost all participating households are doing this, with hardly any taking out the loans.

There is an information leaflet here. It gives the rules, procedures, restrictive conditions and a complete list of payments for various types of work.

External wall insulation

Comments, possible problems and questions

The private-sector Green Deal loans are not attractive enough. They need to generate the billions of pounds worth of work needed to radically improve the energy efficiency of the UK’s housing stock, including huge numbers of old houses that need major, expensive work. Early results indicate that the number of loft and cavity-wall insulation installation jobs, for example, has dropped to a very small fraction of what was being done when there were offers of free or cheap installation. David Kennedy, chief executive of the government's official advisors, the Committee on Climate Change, has warned: ‘We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK.’

The entire Green Deal process revolves around what improvements satisfy the ‘golden rule’ that the savings should be greater than the cost. To ensure this, the initial assessment survey has to be done accurately. There are reports (e.g. in Which? magazine) of sloppy, rushed surveys and errors. Five test inspections of the same house were inconsistent, and some contained serious mistakes.

Even with a good survey, the loan depends on the estimated potential savings from what is installed. The estimate is calculated using complicated formulas that do not do a good job of analysing the building fabric and specifications, particularly for older or more complex properties. Nor do they take account of how well the property is actually built, as opposed to how it was supposed to be built. The estimates should be based on detailed, actual energy-usage data rather than just average figures, as this calculation will affect the size of loan. Things are further confused because energy prices change frequently, with the added complication that switching suppliers and tariffs will be allowed. Working out the estimated savings accurately thus sounds nearly impossible.

Another problem is the cost of the initial survey. If substantial work is then carried out that will probably not be a big factor, and some firms will offer to pay back the survey fee if work is ordered from them. But if the work to be done is minor, such as loft insulation, or if the householder decides not to go ahead then having to pay up-front for the survey looks like a substantial deterrent to people.

The government would like a wide variety of firms involved, from the big energy companies and retailers down to small local firms. So far, only a very small number have signed up, most notably only British Gas and npower of the ‘big six’ energy suppliers. Major retailers such as Tesco or B&Q have not yet done so, nor have any small, local firms. Firms say they are waiting to see how the scheme is working out, and some of the major energy suppliers admit to having severe problems implementing the necessary and very complex computer software needed.

The Green Deal may encourage doorstep selling. If sales people are on commission for getting new business, it is very difficult to ensure that correct and full information on energy savings and costs will be given to potential customers. In addition, other products or extra work (such as repointing or rewiring) may be sold, whether or not it is needed or reasonably priced. Despite advice about never buying under pressure on the doorstep or from cold callers, there will always be people who do not take the time and trouble to shop around, wrongly trust the accuracy and completeness of information given, or simply sign up inadvertently.
* Our recommendation is never to deal with anyone who has contacted you without first being asked to, whether at the door, by phone or by email.

It is not clear whether the Green Deal quotes are being provided in a clear and comparable format across all providers.

There does not seem to be any independent inspection of the work done, to check that it was carried out properly.

Tying the loan to the property may sound good to the purchaser, but will future house purchasers always want to take on what is left of a loan? Many will probably ask for the seller to pay off the plan. And will there be high fees for early redemption?

A similar scheme in Germany only charges interest of 1–2%, and has insulated more than two million homes. Critics have said that the Green Deal interest rates of 7–8% are too high, and along with the scheme’s complexities make it not nearly attractive enough to be successful. Money can be borrowed commercially at similar rates, without having to follow the Green Deal procedures and repayment arrangements.

Initial take-up of the Green Deal

The Green Deal went live in January 2013. At the end of February 2014, it was clear that a fair number of people were having assessments and taking advantage of the initial cashback offer (though almost entirely for new boilers), but only a very tiny number were actually taking out the loans. The numbers were:

  • Green Deal assessments – 163,096, with monthly numbers plateauing at very roughly 16,000 per month
  • Green Deal plans – 1,754, of which 883 were completed
  • Cashback vouchers – 9,808 had been paid following installation, almost all for gas boiler replacements, with a few hundred examples of loft and solid-wall insulation.

The effect on the number of houses being improved – most notably for loft and cavity-wall insulation, has been catastrophic. This is very bad news for people’s energy bills, for carbon emissions, and therefore for climate change.

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