Green Deal – Five reasons why take up is so slow

Unless awareness is significantly increased and consumers can be convinced that the scheme will provide financial benefits to them, then unfortunately the Green Deal will be doomed to failure.

Source: http://www.eecuk.co.uk/

At present it seems that whatever you read in the press or hear in the media about the Green Deal, is nothing but negative.  A chaotic, confusing and frustrating image is painted of something that the Government had hoped would have members of the public scrambling for energy efficient enhancements to their buildings.  This was all based on the premise that any costs for these enhancements would be ‘absorbed’ by the savings that would be made on future energy bills, something referred to as the Golden Rule. Therefore, the cost of any enhancements should not be noticed by the consumer or business. Seems very simple doesn’t it? So why has take up been so slow (some would argue embarrassing!) since the Green Deal was officially launched on 28^th January 2013?

On May 15^th 2013 Knauf Insulation warned that ‘the latest Green Deal statistics, released by the Department of Energy and Climate Change (DECC), showed that it would take more than 200 years to reach the Government’s target of tackling 14 million homes, if the current rate of assessment continued….Data shows that 38,259 assessments have been carried out, resulting in just 245 plans being put in place – an embarrassingly low number that tells you everything you need to know. Behind the scenes the project has been mired in IT and other (legal) delays and, most depressingly for those who have trained as assessors, very few consumers know anything about it’

You may occasionally hear the odd Conservative Member of Parliament or representative from the insulation or renewable technology industry trying to put a more positive spin on the prospects of Green Deal however even in these instances you often feel that they are trying to convince themselves as much as the rest of us.  In short the introduction of Green Deal has shown that there are fundamental flaws in the way the scheme has been set up, the way it has been publicised and the way in which the general public perceive it.  Below I offer some suggestions (in no particular order) of why the Green Deal has so far struggled to have the desired impact:

Source: http://www.thegreendealfactory.co.uk/

1.  The Golden Rule suggests ‘no cost to consumer’?  - The principle of the Golden Rule is good as long as it works, however after making initial enquiries the consumer will soon find out that there are financial implications attached which will impact on them personally.  For example, they will be informed that there is an upfront cost of around £100 for a Green Deal Assessor to visit their property to undertake an inspection and assessment and to make recommendations for enhancements that will meet the Golden Rule.  The Green Deal Assessor will then produce a Green Deal Plan for which the consumer can then approach approved Green Deal Providers in order for the enhancements to be installed. The costs for these enhancements can then be financed through a loan, with interest currently set at 6.9%.

It will be extremely difficult to convince members of the public that taking up a loan and paying an upfront Green Deal Assessment fee, will not be a financial burden to them.  If Green Deal enhancements are implemented, even though there may be cost savings for future energy bills, most consumers live in the here and now, not the future, and will be more concerned with their immediate finances. This is where I think the Government have made an error, by underestimating the public perception of the scheme in the first place.

2.  Poor publicity – People just do not know about it. - Whatever has been done to date to publicise the scheme has not worked:  ‘Awareness about the Green Deal has been steadily rising, growing from 10 per cent before the scheme launched to 22 per cent last month (June 2013), according to latest figures from the Department of Energy and Climate Change (DECC). This follows a £2.9 million communications campaign by the Government when the Green Deal launched. But today's survey findings suggest that building awareness remains a major marketing challenge for many companies and there are growing calls from the industry to do more to incentivise take up of the Green Deal. Source: http://www.greenwisebusiness.co.uk

Awareness of the scheme is one thing however it would be interesting to find out what level of awareness the 22% above actually have.  For example, is their awareness restricted to having heard of the Green Deal or do they actually know about the scheme and how it works?  From the experience I have when talking to people I would suggest that it will more than likely be the former.

3.  Beset with problems – Financing, IT, Training Assessors – There has been a lot of publicity about these problems, not just after the Green Deal’s implementation but many months before.  ‘Energy Minister Greg Barker has blamed the lack of take-up on delays with setting up software systems to manage the Green Deal and funding problems for the long-term finance plans people take out to pay for the upgrades’. http://www.greenwisebusiness.co.uk 

Although these problems will have an impact on progress of Green Deal, they almost become irrelevant if consumers are not interested in the first place and do not take up the scheme.  Also, Green Deal has been years in the making and you would have expected these issues would have been ironed out before the scheme was implemented.    For the Energy Minister to blame the poor take up on these issues is a poor indictment of the way the scheme has been developed and implemented by the Government.

4.  Possibly seen as ‘blight’ to property as loan stays with the property  - One of the core principles of Green Deal is that the ‘loan’ belongs to the property and not the individual.  Therefore when property is bought and sold, any outstanding payments will become the responsibility of the new owner and deducted via their energy bills. This is an additional check that a Solicitor will need to make during the conveyance process.  Again, those who do not understand the scheme are likely to see this as an additional debt, which they may not have chosen for themselves and one that they may not be prepared to take on.

5.  Lack of interest in the environment and understanding of technologies - As much as many 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.  Many will have little to no knowledge of the numerous enhancements/renewable technologies that could be installed in their property.  In the event that a consumer proceeds with a Green Deal, it is likely that there will be confusion in the way that enhancement/technologies are used efficiently, which could actually prove to be very cost ineffective. It could prove to be difficult therefore to convince large numbers of people to sign up to a Green Deal scheme when they may have no interest in the environment, will not have any desire to learn about new technology and will not be prepared to take on any financial burden.  Basically, there will be people (and these could be in large numbers) who will just not be interested.

In summary, I have stated in a previous article that in principleGreen Deal is a good idea.  The problem however is the difference between in principle and in practice.  In practice although Green Deal is still in the early stages of implementation where it appears that the general public are both not aware and not convinced by the scheme, which is demonstrated by the extremely disappointed take up to date.  Unless awareness is significantly increased and consumers can be convinced that the scheme will provide financial benefits to them, then unfortunately the Green Deal will be doomed to failure.

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