Green Deal Financials Explained 

 

Green Deal Finance ExplainedThe Green Deal is a great opportunity to improve the energy-efficiency of your home or business without paying upfront or taking out a conventional loan. On this page, we explain the ‘pay as you save’ finance mechanism that supports the Green Deal, and how it could work for you.

How does Green Deal finance work?

The Green Deal provides a unique type of loan attached to the property, not to any individual. The cost is paid back in installments through the electricity bill; repayments always rest with the current bill-payer, even if the property changes hands.

The Green Deal finances 26 types of energy-efficiency improvement measure; for a measure to qualify for Green Deal finance, the expected financial savings due to the improvement (based on predicted usage) must be greater than the costs attached to the energy bill. This is called the ‘Golden Rule’.

When you access the Green Deal, a Green Deal Provider provides finance to cover one or more improvement measures. This includes the cost of the product(s), installation, and ‘making good’ if necessary (restoring your property to its original condition, for example by filling and repainting any areas that have been disturbed).

They will agree a Green Deal Plan with you, which will set out the level of finance and a repayment plan. Once you have accepted the proposed Plan, the Green Deal Provider will then instruct your energy provider to attach the Green Deal charge to your energy bill. Although most Green Deal improvements will actually reduce you’re heating bills (e.g. gas, oil or electricity), your Green Deal repayments will always be added to your electricity bill (simply because everyone has one of those).

How is Green Deal finance different from a conventional loan?

Green Deal finance offers a number of advantages for most people over a conventional loan.

With the Green Deal, you ‘pay as your save’, so you should not have to allocate any additional money from your household budget to pay back Green Deal finance. The repayments are made as a charge attached to your energy bill, but due to the ‘Golden Rule’ you should not see any increase in your bills.

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