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Still no certainty on Green Deal |
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19 Sep 2011, 5:24 PM
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Last week the House of Commons debated the Energy Bill again before its move for the final time back to the Lords. MPs were unable to obtain any guarantees of how valuable the Green Deal assistance will be for residents wishing to improve their homes. Most of the debate focussed on the Green Deal, the “pay as you save” scheme for retrofitting energy efficiency measures to every one of the 28 million homes in the country.
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A new amendment was passed to force the secretary of state to submit proposals on the ways in which the Green Investment Bank could maximise its take-up and to enable the consumer to compare recommendations and estimated costs and savings. But there is still no clarity on the amount of funding the green deal will be able to provide, a factor that will have a massive effect on the degree of take-up of the scheme.
This is in effect limited by the 'golden rule' that the cumulative cost of the rate of interest and the cost of the installation should not exceed the amount that people are currently paying on their energy bills.
It's the interest rate of the loan repayments that is one of the crucial factors. The Great British Refurb campaign's survey of about 2,000 people found that whereas 56% saw the Green Deal as attractive, only 7% said that they would be prepared to take it up if a 6% interest rate applied; if it were set at 2% per annum, they would be “very” or “fairly” likely to take it up.
MPs said they wanted the scheme to have a single interest rate in order to provide clarity, fairness, stimulate mass demand and, crucially, force green deal providers to "compete for customers on the cost and quality of the energy efficiency measures and installation, rather than on the headline interest rate of the finance".
Green MP Caroline Lucas (this week voted MP of the Year in the Scottish Widows & Dods Women in Public Life Awards) wanted the Green Investment Bank to be able to ensure a common and low interest rate - below 2% if possible - pointing out that a (very) different scheme in Germany offers publicly subsidised interest rates of 2.65% and has achieved 100,000 residential retrofits in a year. The government must achieve 145,000 every month to have a hope of meeting the required targets.
DECC minister Gregg Barker said the legislation will not place restrictions on the level of interest charged, instead relying on the market to decide. Nor could he guarantee that the Green Investment Bank could support the interest rate, although its priorities are to address market failure.
Barker said that it is up to the market to set the interest rate, however, although there will be some protection for the fuel poor, and in order to prevent subsequent owners of a property being penalised for the fact that the previous residents were not considered credit-worthy.
The government has yet to undertake consultation on the secondary legislation that will bring in the regulations, and this is what will determine the degree of willingness of financial backers to climb on board.
Barker added that the government's own consumer research showed that the biggest factor in their taking up the Green Deal would be "a desire to make their home nicer".
The Energy Company Obligation (ECO) for energy companies is supposed to target the needs of vulnerable consumers, and the green deal is supposed to tackle the issue of fuel poverty, but with an unprecedented 1.9 million people in arrears with their energy bills in this country and 5.5 million living in fuel poverty - both numbers rising by the day - it is unclear whether any financier is going to want to touch them.
Barker admitted as much, saying "I cannot give a universal commitment" that they will all have access to the deal.
Barker tried to provide reassurance by saying "Many of the families and individuals [in arrears or fuel poverty] will be captured by community roll-out and street-by-street roll-out of energy efficiency improvement schemes."...
To read the full article, go to..www.eaem.co.uk
Credits:: eaem.co.uk
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