Is the new Green Deal worth investing in?

Traffic light
Are you going to give energy efficiency the green light?
"The Green Deal Home Improvement Fund is another way the government is making it simpler and cheaper for people to stay warm and improve their homes," Greg Barker, energy and climate change minister
  • | by Emily Bater

Go green, life is cheaper there
Go green, in the open air
Go green, where the skies are blue
Go green, this is what we're gonna do - or at least, that's what the government hopes.

While we haven't been basking in too much glorious summer sun so far this year, your home's energy usage may not cross your mind until winter winds blow in once more.

But the government wants you to think ahead - so much so that it's offering you some money to do so.

The new Green Deal Home Improvement Fund (GDHIF), launched in June, offers homeowners in England and Wales up to £7,600 to make energy-efficient improvements to their home and save money on their energy bills in the process.

Homeowners can install things like solid wall installation and new energy systems, and then will receive money back on the contributions they make towards the changes. So if you've been waiting to replace your boiler, now might be the time.

Under the new scheme, households can get up to £1,000 for installing two measures from an approved list of improvements (see below). They will receive up to £6,000 for installing solid wall insulation - around 75% of the cost - and can then get up to £100 refunded from the money they laid out for their Green Deal Assessment.

These changes are an attempt by the government to sex up the original Green Deal, introduced in late 2012. Homeowners have been sceptical about the deal since its inception, and this has been reflected in the level of interest.

Even after the government introduced a finance scheme, allowing people to pay back the improvements over time via their bills, the scheme has had a low take-up - just 1% of households assessed for the Green Deal since it was introduced have signed up, according to figures released by the Department of Energy and Climate Change in May this year.

This could be put down to the untested nature of the scheme and an interest rate of 7%, not to mention the complicated process required to actually take advantage of the finance part of the deal.

The loan is attached to your property, so it will be passed on if you ever decide to sell your house in the future. The risks of this - whether it makes your home harder to sell - are unknown.'s Mr Energy, aka Jeremy Cryer, says: "There's a lack of detail around how investment in the Green Deal will affect the sale of a homeowner's property. The small numbers of people currently taking up the deal means that how the loan will impact conveyancing is untested, and whether new buyers would be happy to take on an extra bill remains to be seen."

The new system should, however, prove simpler - while in the past a Green Deal Assessment was needed to be eligible for the Green Deal cashback scheme, now households with a valid Energy Performance Certificate can apply for GDHIF payments.

Energy and climate change minister Greg Barker said: "The Green Deal Home Improvement Fund is another way the government is making it simpler and cheaper for people to stay warm and improve their homes.

"I want households across the country to benefit from more energy-efficient homes and reduced bills through the Green Deal, and that is what the new home incentive fund will do."

How it works

To apply for a slice of the energy-efficiency pie, householders must have a valid Green Deal Assessment Report, carried out in the last two years, or an Energy Performance Certificate. The assessment costs around £150, and an assessor comes to your home to advise you on the potential changes and how much you could save on energy bills.

You must then apply before carrying out any of the improvements. These in turn must be installed by a registered Green Deal company. Once your application has been successful, you need to have the measures installed within six months.

Is it worth it?

The Green Deal and now its new incarnation work on a pay-as-you-save basis - this means that the energy provider will finance energy-efficient measures and the saving you make on your bill are intended to then pay off the loan, plus interest.

If the spending outweighs the savings, the energy company won't be able to lend the whole amount and householders will have to pay the rest. You'll find out the impact these changes will have during the assessment, and if your home won't save, you won't be eligible.

However, Cryer says that there are no guarantees that the improvements will lower energy bills.

"Energy-efficient measures may lower bills, but this may not equal the amount borrowed under Green Deal finance," he said.

"The impact that these changes have on bills is a step in the right direction, but consumers shouldn't forget to compare their energy tariff with other providers to ensure they're getting the right deal and making the most of these improvements."

With the new GDHIF, you must fit two energy-saving improvements. It's important to do the maths and check which of these will work best for you, and which payment option to go for. You don't have to take out a Green Deal loan to be eligible, and remember that there are other ways of financing the improvements.

If you can afford to pay for a new boiler outright, for example, you wouldn't then have to pay the interest associated with the Green Deal finance.

If you do decide to go with the GDHIF, approach a number of their registered installers before deciding on one to ensure you get the most competitive rate.

Unlike the original Green Deal scheme, registered Green Deal Installers as well as Green Deal Providers can now make the changes, meaning you have more tradesmen to choose from when shopping around for the best deal.

The catch

There are a few catches to the new scheme. You can't combine the home improvement fund with funding from the Energy Company Obligation (ECO), the Green Deal Communities Scheme or the government's existing cashback scheme, which it introduced in December 2013.