Green Deal: Designed to Fail

It is pretty generally accepted that the Green Deal is poorly designed, difficult to implement, and will run into a wall of apathy that makes the 15% energy supply switch rates look like an unmitigated success!

So what exactly does the consumer get?

They get a loan underwritten by the government that they can pay back through their energy bills; a loan tied to the property and not to them personally. However to work out whether getting the loan is worth the trouble they need an assessment done on their home. Cha ching – that costs cash. What happens if the assessor turns up no investments that meet the golden rule (that the cost must be more than outweighed by the energy savings)? Answer – the consumer pays the assessor – amount unspecified but think of the call out rates for plumbers.

So not free then…

Even assuming the assessment indicates investments that pay back; the green deal isn’t subsidised at all – the consumer picks up every element of the costs of delivery right down to cost of capital for the green deal provider. Which brings us nicely on to delivery – who is going to deliver these various solutions. Chances are the company that installs double glazing isn’t also an expert in insulation and ground  source heat pumps! So you are going to need a project manager; and it would seem likely that the companies most likely to be able to step up to the plate are large engineering firms, big materials wholesalers and retailers, and of course the big six; and we all know how popular they are. So much for the little guy getting to eat at the table! Even assuming the attrition rate to this point is not so bad as to have eliminated any activity at all; the next question might be how do you set about selling your house with an efficiency debt slung around its neck? Or if you are renting, how do you know whether you won’t be picking up a larger than expected energy bill once you move in because you are inheriting an ill conceived green deal project?

But how could it be ill conceived you ask, surely the golden rule prevents loss?

Well, unfortunately no, because the savings are calculated against a benchmark – normally the EPC methodology tweaked, which at best is an educated guess and in any event is predicated on the behaviours of the people in the house when the green deal was struck – so not you then if you are an inheritor renter/purchaser. Basically, this is the government using its balance sheet and low cost of borrowing to construct a policy that has more holes in it than a colander. So with that whopping 24 companies registered to deliver the green deal to 26 million homes, good luck to you all –you’re going to need it. Me; I might sit this one out thanks.

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