United Kingdom

UK-9:Green Deal

Policy Description

The Green Deal is a market framework, which enables private firms in Great Britain (Green Deal providers) to offer consumers energy efficiency improvements to their homes, community spaces or businesses (including industry) at no upfront cost. The Green Deal financial mechanism eliminates the need for energy customers to pay upfront for energy efficiency measures and instead allows the cost of the measures to be recovered through the electricity bills (i.e. a systems benefit charge).

Description

The Green Deal is a market framework, which enables private firms in Great Britain (Green Deal providers) to offer consumers energy efficiency improvements to their homes, community spaces or businesses (including industry) (*1) at no upfront cost. The Green Deal financial mechanism eliminates the need for energy customers to pay upfront for energy efficiency measures and instead allows the cost of the measures to be recovered through the electricity bills (i.e. a systems benefit charge).

Businesses will be able to apply for a Green Deal assessment of their energy savings potential to be undertaken by accredited advisors. Green Deal Finance will only be offered for efficiency packages of measures that meet ‘the golden rule’ (see requirements for the target group). Green Deal providers will receive the required finance to pay for the upfront costs of the efficiency measures from The Green Deal Finance Company (TGDFC) (*3). Repayments from customers will be collected by the energy companies through the energy bills.

The scheme was established by the UK Government through the Energy Bill introduced to Parliament in December 2010 [1] (*4). It started operations in early 2013. So far DECC has conducted almost 60,000 initial assessments. As of August 2013, about 130 households had signed up for the scheme [2].  The Green Deal Oversight Body has responsibility for managing the Green Deal Code of Practice, administering the scheme and for reporting and enforcement (*5).

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 2013

Policy Linkages

Complements EU Emissions Trading System (EU ETS) Effort Defining
Complements Climate Change Agreements (CCA) Effort Defining

Agencies Responsible

Department of Energy and Climate Change
Green Deal Oversight Body

Primary Objective: Energy

Objective

Stimulate investments in energy-efficient technologies

Target Group

households and business. The business target group to enable SMEs to to access funding for energy efficiency improvements, and larger businesses to meet their obligations under existing schemes at lower cost, such as Climate Change Agreements (*1)

Driver of energy consumption or emissions affected by policy: Technology Implementation Rate

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

A wide range of energy efficiency investments and target groups are eligible.

Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Requirements on the Target Group

  • To qualify for the Green Deal, the ‘golden rule’ is that the expected cost savings from reductions in energy use must be equal to or greater than the cost of the measure [3].
  • Green Deal intallers or adviser will have to display the official Green Deal quality mark to demonstrate that they comply with the relevant requirements. The mark will not be a marketing brand logo and is not designed to promote Green Deal or convey its properties or values to consumers; instead it would simply be an emblem displayed by certified bodies in the supply chain [3]

Support by Government

  • The Government provides regulatory assurance that enables access to finance through the energy bill.
  • The Government provides the required implementation guidance (see implementation toolbox)
  • Green Deal providers will receive the required finance to pay for the upfront costs of the efficiency measures from the Green Deal Finance Company (TGDFC). The TGDFC is a national aggregator designed to make finance available to all accredited Green Deal Providers on an equal and open basis. By operating at a national level, it intends to minimise the operating and administration costs of Green Deals and will aim to access the cheapest sources of finance in the market at the highest possible credit rating [7]
  • Once finance for measures has been approved, installation is the next step. The Green Deal is designed to provide trusted, accredited installation of energy efficiency measures to households and businesses. Certification of installers is an essential element of this, as work will be undertaken by a range of tradespeople. The standards and certification framework will ensure that all work is completed to a recognised standard and that consumers can
    expect the same level of customer care and protection regardless of the installer [3]. 

Implementation Toolbox

  • Green Deal Framework Regulations (*2)
  • Green Deal Code of Practice [4]
  • Green Deal Provider Guide [5]
  • Green Deal Provider Authorisation – Guidance for Applicants [6]

Complexity of Implementation

Government

Government has to develop the framework regulations, codes of practice, establish accreditation procedures for green deal advisors, providers and installers. Besides, the scheme requires the creation of an Oversight Body (*5)

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions 0.7 TWh/yr saved in the industrial sector from 2013 to 2020 [7] Not available
Estimated costs/benefits for industry Not available
Estimated cost for government ­As of August 2013, government had spent 16 million pounds on the programme [2] Not available

References & Footnotes

References

[1] DECC (2011). UK Report on Articles 4 and 14 of the EU End-use Efficiency and Energy Services Directive (ESD). July 2011.

[2] BBC News (August 2013). Only 132 signed up to Green Deal programme. Available at: http://www.bbc.co.uk/news/business-23766117

[3] DECC (2010). The Green Deal. A summary of the Government’s proposals. Available at: http://www.decc.gov.uk/assets/decc/legislation/energybill/1010-green-deal-summary-proposals.pdf

[4] DECC (2012). Draft Green Deal Code of Practice. June 2012. Available from: http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/green-deal/5680-draft-green-deal-code-of-practice-.pdf

[5] DECC (2012). Green Deal Provider Guide. April 2012. Available from: http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/green-deal/4964-green-deal-providers-guide.pdf

[6] DECC (2012) Green Deal Provider Authorisation – Guidance for Applicants. August 2012. Available from: http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/green-deal/6068-green-deal-provider-guidance-authorisation-.pdf

[7] The Green Deal Finance Company (TGDFC, 2012). Green Deal financing framework. Available at: http://thegreendealfinancecompany.com

[8] DECC (2012). Capturing the full electricity efficiency potential of the UK. (Draft Report), July 2012. Available at: http://www.decc.gov.uk/assets/decc/11/cutting-emissions/5776-capturing-the-full-electricity-efficiency-potentia.pdf

Footnotes

(*5) A full description of the responsibilities of the oversight body can be found at: http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/green-deal/3745-role-green-deal-oversight-body.pdf

(*1) The UK National Energy Efficiency Action Plan defines the business sector as: ‘extremely diverse and includes companies which range from high energy intensive industries to those for whom it represents a very minimal element of their cost base’ [6].

(*2) Green Deal Framework Regulations can be found in: http://www.legislation.gov.uk/ukdsi/2012/9780111525227/contents

(*3) The Green Deal Finance Company is an industry led consortium with over 50 members from across the industry, both public and private sector. The Company was incorporated in March 2012 as a not-for-profit mutual limited by guarantee. The members all share our ambition to deliver universal low cost financing to households, enabling the widest possible installation of domestic energy efficiency measures under the Green Deal programme. A general description of the Green Deal financing framework can be found at: http://thegreendealfinancecompany.com

(*4) On October 18th 2011 the Energy Bill received Royal Assent and became the Energy Act 2011.