What is the Green Deal?

The Green Deal is a new way to pay for energy-saving home improvements. You can take out Green Deal finance to pay for measures such as loft, cavity or solid wall insulation, double glazing, a new boiler or even a ‘micro-generation’ system such as solar panels. The loan is repaid through savings made on your electricity bill, therefore your bills shouldn’t be any higher than usual. Once the loan is paid off you can take full advantage of the energy savings.

How is the Green Deal different?

The Green Deal differs significantly from old energy schemes, as it can involve taking out a loan to help pay for the energy-efficient measures. The loan is paid back through your electricity bill and is attached to your electricity supply, rather than you as an individual. This means that if you move, it will pass on to your home’s next owner.

Green Deal Loans

Green Deal loans are repaid through your electricity bill. The way the deal differs from a standard loan is that the repayments you’ll make on the loan will (in theory at least) be covered by the energy bill savings you make from having the energy-saving home improvements installed. This system is known as the ‘Golden Rule’ – you should not pay back more in loan repayments than you are saving on your energy bill.

But the Golden Rule is not a guarantee, just a guideline based on energy-saving estimates. So it’s also possible that repayments could be more than your savings while your plan is in place – meaning you would have to find extra cash to fund the difference.

You will have to go through a credit checking process in order to obtain a Green Deal loan, and the rates of interest on Green Deal loans are decided by each individual provider. The government has stated that anyone who falls into arrears on their energy bills with a Green Deal loan attached is protected by the obligations on arrears followed by energy suppliers. This means that you must let your Green Deal provider know, and it will offer you advice and help work out a payment plan based on what you can afford.

If you do get a quote for a Green Deal plan, we advise that you read all the terms carefully and consider all the implications before signing up to this long-term financial commitment. Green Deal plans will have different interest rates, charges and conditions, depending on your Green Deal provider, which measures you choose to install, and the term of your plan.