Green Deal Launch

This is the headline diagram that the Gov wants people to see. On the face of it, it looks great. Same bills, but a more efficient home, all with no up-front capital expense.

Personally I think that this can the case for some homes; making our homes more efficient can save money and if you have no capital to spare then this is a way of getting a loan against the house not you as a person.

There are a wide number of Green Deal Approved measures (pdf file from DECC) – new boilers, insulation, draught proofing etc. The choices are generated by a computer programme called rdSAP (Reduced Data Standard Assessment Procedure). This programme is not the best calculator, but it is the UK industry standard. It also lacks a lot of the relationships between interventions that might be very important for your home. So some interventions might have unintended consequences. The worse of these is the relationship with moisture in the home. Older solid walled houses are really at risk by the use of some insulation products (unfortunately these are the most efficient and cheapest types of insulation). RdSAP will tell the assessors and the Green Deal providers that large savings are available if you use these insulations. What it doesn’t tell them is that it it likely to cause damp to migrate inside, or that external wall finishes might face damage. So be careful if you have a solid walled home.

The other issue that is not being mentioned, is that there is a built in 7.5% interest rate with the Green Deal. So you might well be better off just using savings to do the work, or by re-mortgaging as this will be much lower cost than the high interest rates demanded by Green Deal.

Many measures will be very expensive and will not make too many savings. For example; new windows, underfloor heating,  heat recovery systems etc. So it will be a high cost for little return, so the Golden Rule (savings are more than then cost of the measures over a set time scale) will require that you put in a lot of your own money to make sure that you are not breaking this rule. So again it is more complicated than it initially appears.

What having a Green Deal loan secured against a house will do with re-selling that house is yet to be tested, but it might be a concern to people.

Overall I think that the Green Deal is an opportunity for some to take advantage of energy savings, but people need to go into the dreaded detail to ensure that it is the right choice.