Tuesday, May 29, 2012

(Green) Deal or No Deal?

In reality the green deal has the potential to be 'a political own goal', if consumers and businesses do not make the savings they are promised.
Source: Google Images
You only need to pick up a newspaper or magazine or indeed watch the news on TV or the Internet to realise that the coalition government's 'flagship piece of legislation' (their words not mine!), the Energy Act 2011, will soon thrust upon us the Green Deal, which promises to deliver energy efficiency savings to homes and businesses. Consumers and businesses will end up saving money on fuel bills, carbon emissions will be significantly reduced and the UK will achieve its challenging emissions reduction targets and we ultimately save the planet!  So what could possibly go wrong?
It is clear that no matter how much regulation or initiatives that the Government introduces for new buildings, this will not be enough to have any major impact on meeting our carbon emissions targets, so it actually makes sense to try to do something about the existing varied and ageing building stock that we have in the UK.  The difficulty will be trying to convince consumers and businesses that the green deal will actually deliver what it promises, primarily from a financial point of view.  
As much as we may want to contribute to a reduction in greenhouse gas emissions, the vast majority of people will undoubtedly be motivated by the financial benefits 'signing up to the 'Green Deal' will bring to them, and herein lies a potential problem.
The Green Deal works on the principle that upfront costs for any enhancements are financed via a low interest loan, which is added to your energy bills. The 'Golden Rule' then assumes that the repayment of the loan will not be greater than the savings you make on your energy bills as a result of these enhancements.  Therefore the cost of the enhancements should not be noticed by the consumer or business.  
In order for the golden rule to work, this will require a very careful assessment of a building by the  Green Deal Assessor. As an example let us consider a turn of the century solid wall Victorian end of terrace dwelling with three bedrooms.  There are a number of enhancements that the green deal assessor may recommend, such as insulating the roof space, draft proofing, energy efficient glazing etc, possibly even the installation of renewable technologies such as photovoltaic panels, solar water heating or an air source heat pump. All of these may be deemed to be appropriate, however it is likely that improving the energy efficiency of the solid walls will be the most problematic and expensive of all.
If the dwelling described above is occupied then insulating internally will be very disruptive. When you consider that internal dry lining of walls will require clearing rooms, installing the dry lining and insulation, moving and accommodating electrical sockets and switches (what happens if the electrical system is then established to outdated and in poor condition), will a re-wire be required?, then there is detailing around door and window openings, plastering, re-decoration and eventually moving all of the furniture and fittings back into the room. How on earth does a green deal assessor ensure that the golden rule is achieved with the likely expense of this? It would be pointless recommending other enhancements if the fabric of the building is not improved first, as the inefficiency of the walls would negate any improvements made by other enhancements.  The other alternative is external insulation, however although less disruptive, this is also likely to be very expensive and will throw up other issues such as detailing around openings and at eaves levels and will not be a possibility if a building is listed or in a conservation area.
So there you have it, the success of green deal will ultimately be measured by whether it delivers what it promises.  It is going to be very interesting to see public reaction in terms of initial take up and also when the golden rule will be challenged and tested, which it ultimately will be!  The government approach in decided to tackle the problem of the inefficient existing building stock is bold, necessary and commendable.  In reality the green deal has the potential to be 'a political own goal', if consumers and businesses do not make the savings they are promised.
(Green) Deal or No Deal? - Only time will tell!
Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice.

1 comment:

  1. Hi Gary

    The example on the solid wall could also factor in the Energy Company Obligation ECO grants that are applied to solid wall Green Deals, and this would make the installation much more cost effective and attractive to home owners and landlords.. See http://www.greendealprotection.co.uk/greendealenergycompanyobligationeco.html for details.