Sunday, July 21, 2013

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.

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 28th January 2013?

On May 15th 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:

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:

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’. 

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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  1. Gary--this is an interesting article. You may like to see the School of Construction Management & Engineering (University of Reading) response to the APPG on Sustainable Construction, which included a discussion on the Green Deal:

    Tim Dixon, Chair in Sustainable Futures in the Built Environment
    School of Construction Management and Engineering
    University of Reading

    1. Tim,

      Thank you very much for your response.

      A very interesting paper which I think provides a very good assessments of Green Deal with some sensible suggestions on a way forward. I would recommend the paper to my readers who can find it by copying and pasting the URL provided above, by Tim, into your browser.

      Kind regards


  2. Hi Gary,

    I think your opening gambit is a fair summary - awareness needs to be improved - but I also think your blog makes a few oversights:

    Your first reason mentions an upfront cost to the consumer and a sense of burden because of the loan. In reality I think the Green Deal Providers (who are most likely to promote the scheme and therefore take the initial instructions to conduct an assessment) will bear the burden of the upfront cost and incorporate it into the loan (I know, it's not an ideal model as the consumer is free to take their Green Deal assessment to another provider...). Secondly, one of the key points the assessor will make to the consumer is that they will be no worse off. That is a fairly easy concept to understand for any consumer - and it's what underpins the whole assessment.

    Your fourth reason mentions the Green Deal being a blight on the property. I think most people will agree that an obvious improvement to a property is not a blight. The majority of improvements that are made under the Green Deal which meet the golden rule and are therefore 100% financed under the scheme (this would most likely exclude PV, wind turbines, micro CHP and EWI) will, at the most, be no more than the cost of a new boiler. In the context of average house prices a Green Deal loan registered on a property is going to be a fairly small negotiating point in most cases. And the part financed stuff? Well if someone has gone to the expense of part financing a major energy efficiency measure that falls outside of the golden rule then the chances are they are probably not planning on putting their house on the market anytime soon!

    Your fifth reason raises the point of awareness of technologies: the majority of the 40 or so measures available under the Green Deal are passive and require no operating eg; insulation, draught proofing, double glazing, insulated doors etc. It is true that many people do not put much thought in to correctly setting their thermostats, timers, boiler settings and TRVs for best efficiency - however, that is an issue regardless of whether Green Deal measures have been implemented or not. And on that point - the assessor has to make a return visit after the measures have been installed to conduct a final energy assessment and explain best and correct use of any technologies that have been installed.

    Granted, the Green Deal is not perfect by any stretch of the imagination and some tweaks are definitely needed but it is not totally lacking in logic; unfortunately, what is lacking is robust and positive explanation and promotion to the public.

    Kind regards
    Proudhouse Property

    1. Chris,

      Thank you very much for taking the time to produce such a comprehensive response to my article.

      I understand your point about consumers being convinced that they will be no worse off, however interest/take up to date suggests that this point is not coming across to the general public, which emphasises the need for better awareness.

      Green Deal enhancements will be an obvious improvement to a property, however this may be the opinion of a seller who had them installed, however, a buyer, particularly one with little to no understanding of Green Deal may not see it this way and may object to taking on any outstanding loan payments through there energy bills. This is where there could be a perceived blight on the property, which may require additional negotiation. Of course the seller always has the option to pay off the Green Deal loan.

      You make some interesting points and once again I would like to thank you for your response.

      Kind regard


  3. Love that video, was she for real? It is not a lot like an EPC it is an EPC and since when did the Green Deal Occupancy Assessment ask about lighting in standard lamps? Someone also needs to buy her a laser measure.

  4. Tape measures are rarely used for measuring areas now as the previous comment suggested. Yes it is an EPC! plus the occupancy data which personalises the standardised EPC data to the property and its occupiers.

    I am not keen on your assumption that the Providers will absorb the cost of the assessment. At a stroke you take out all the independent small Assessors there to get the best for their client the homeowner rather than what will provide the Assessors tied to Providers with the best commission. Although the Code of Practice is there, all you have to do is say to the occupier that you have finished the assessment and are now acting in a sales capacity....! We would look for Providers to absorb the cost of our assessments within a Green deal Plan but they don't have to.

  5. My main concern as a conservation minded architect is the damage that could be done to milions of unlisted properties by "improvements" such as external insulation and the failiure of assesors to understand traditional construction. One only has to look at the immense damage done to our heritage by the upvc window industry.

  6. Worth mentioning also that as the Energy companies have admitted, they are passing on the cost to them of the Green Deal (as it hits their profits) on to the consumer in raising energy prices. Thus the poor consumer will end up paying for their GD "improvements" not once but twice. Also the EC has a problem with the VAT relief the govt. has awarded the GD- this was intended for social programmes, and the GD May be many things, but it is no social programme.

  7. I'd like to throw in a tangental thought here if possible? - With such a significant amount of the housing stock being rented I am interested to understand why there is no carrot or stick incentive to get these properties more efficient and cost effective to run. Having rented for for over 4 years between owning houses, we found ourselves in several rental properties with practically no insulation measures at all. On two occasions we asked for some insulation to be installed and were met with a 'No' because it cost the landlord and provided no benefit to them. One house was an F rating the other was an amazing G rating and became known as 'The fridge' to family and friends.

    If you have to achieve a D rating before you can have PV panels installed as a house owner then surely it is reasonable to have a house achieve a D rating before it is let to the market? Or am I being nieve here?