UK’s Green Deal Passes: New Consumer Help for Home Efficiency Upgrades
On Oct. 18 2011, the Energy Act 2011 became law in the United Kingdom. The law establishes a new program called the Green Deal, which is designed to assist British consumers in financing energy efficiency upgrades to their homes. Through such upgrades, the Green Deal aims to help consumers cope with rising energy costs and help the United Kingdom meet its greenhouse gas reduction commitments.
One member of Parliament, Labour politician Dave Anderson, says the program is needed because of the aging homes in the country. “We need to refurbish our housing stock. We have millions of properties that are very poor at retaining heat and therefore are very inefficient consumers of very expensive energy,” he said. As the Alliance previously reported, the Green Deal mainly helps homeowners finance adding insulation to their homes, but the program can also help them afford efficient windows and boilers.
Chris Huhne, the United Kingdom’s Secretary of State for Energy and Climate Change, says the Green Deal could support an estimated 250,000 jobs and result in £15 billion (almost $24 billion) in housing-sector investments. The first Green Deal retrofits are expected to begin in late 2012.
How the Green Deal Works
The Green Deal will use on-bill financing, which allows consumers to pay nothing up-front for efficiency improvements. Instead of paying up-front, consumers pay back the cost of the improvements through a charge on their utility bills. The charge must be smaller than the energy savings of the improvement – making consumers immediately better off financially.
Certain low-income and elderly consumers would be given extra assistance by utilities, including deeper retrofits at reduced or zero cost in some instances. Improvements, identified by third-party assessors, would be undertaken by contractors certified to participate in the program.
Rising energy prices in the United Kingdom have made the cost savings element of the Green Deal program particularly attractive. Fuel poverty – when more than 10% of a household’s income goes toward heating fuel costs, has become an increasing concern. In fact, one April 2011 survey suggested that as much as 24% of U.K. households fall in the category.
The Energy Act 2011
The Green Deal was included in a larger bill, the Energy Act 2011, which contains a range of other energy policy provisions, including energy efficiency measures:
- The least efficient homes, receiving an “E” or worse on the European Union’s home efficiency label’s A-to-G scale, would not be allowed to be rented out, requiring landlords to make efficiency improvements to rental properties.
- Access to Energy Performance Certificates would be improved. These certificates contain information about certain buildings’ energy use (including the A-to-G efficiency scale), CO2 emissions, potential energy efficiency, and recommendations for reducing energy use and CO2 emissions.
- Information on energy bills would be improved so consumers can better understand it.
Further Resources
- Press release from the Department of Energy and Climate Change
- Parliamentary information on the Energy Act 2011
- Energy Act 2011bill text [.pdf]
Blog Type: Efficiency News
Programs: Policy and Research Program
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I am a Winnipeg Painter. We have had a very similar program for years here in Manitoba, where our electrical utility would finance energy saving renovations for their customers. It really was a win win win situation for all parties involved.
The homeowner wins because they get cheap financing for their home improvements. Now windows, doors, insulation, even HVAC equipment can be financed with a low interest loan.
The contractors win because they have a cheap source of financing to offer their clients, and the electrical utility pays out very quickly.
And of course, the electrical utility wins as the interest income on the loans becomes a new revenue source.
I commend The green Deal for doing the same. Everyone will benefit from it.
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This is a great model for other countries to learn from (hint, hint, USA) not only for the energy savings, but for increased jobs. We seem to be backward in getting anything done toward energy efficiency, there seem to be too many against it. They think if you just deny the problem it will go away. I am glad to see there are still forward thinking people elsewhere in the world. Automatic Pool Cleaners
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