Green Deal £14Billion

UK Energy Secretary Chris Huhne said yesterday that the government’s flagship Green Deal home energy efficiency programme will unleash £14 billion of private section investment over the next decade.

The claim was made as the Department of Energy and Climate Change (DECC) published the consultation on the Green Deal as part of Huhne’s annual energy statement to Parliament.

The Energy Secretary also pointed to new analysis, which says that the government’s policies will mean average household energy bills will be £94 (or 7%) lower by 2020 than they would be otherwise.

The Green Deal, which aims to help homeowners and businesses meet the upfront costs of energy efficiency improvements through long-term loans paid for out of savings to fuel bills, could support 65,000 jobs in insulation and construction by 2015.

“The Green Deal is a massive business opportunity for firms up and down Britain,” said Huhne in a statement. “By stimulating billions of pounds of private sector investment, the Green Deal will revolutionise the way that we keep our homes warm, making them cosier, more efficient and all at no upfront cost.”

The programme will launch next October and includes a new requirement on energy companies to provide £1.3 billion a year to help the most vulnerable and those with hard-to-treat homes take part.

Huhne added that the government is considering offering up to £150 cashback for homes taking part in the scheme and is looking at other ways of creating incentives for homeowners, businesses and providers to participate.

He also hit back at the critics of the government’s policies, unveiling new figures the estimate the impacts of energy and climate change policies on energy prices and bills.

According to the analysis, household electricity bills will have increased by around 16% and gas bills by 25% over the last year, mostly as a result of rising global energy prices.

By comparison, Huhne argues, government policies account for only around 7% of average household energy bills and have contributed very little to recent price rises.

From 2013, he says, the analysis indicates that overall savings will start to kick in, as prices continue to rise, so that by 2020 the government’s policies contribute to a reduction in the average annual bill of around £94 or 7%. If prices rise faster than the analysis estimates, consumers will be even better off.

“There are certainly costs to replacing our ageing energy infrastructure with modern clean power stations, and we take very seriously any impact of our policies on what consumers and businesses pay,” Huhne said in his statement. “We’ve repeatedly taken steps to reduce this – by removing some planned levies on bills and making others more cost effective and within budget.”

But he emphasised that any savings – and the whole priority of the government’s strategy – relies on consumers reducing the amount of energy used in their homes.

The CBI welcomed the government’s proposed incentives for taking up the Green Deal, but warned there is some way to go after the solar feed-in tariffs fiasco to rebuild business confidence.

“Businesses see selling energy efficiency as a win-win for saving carbon and boosting private sector growth,” says CBI director for business environment Rhian Kelly. “That is why we are pleased that the government acknowledges the need for incentives to ensure the scheme is attractive to the public.”

But Friends of the Earth said that the proposals do not go far enough and must be strengthened.

“Our energy bills are rocketing because the Big Six power companies are keeping us hooked on expensive imported gas,” commented energy campaigner Paul Steedman. “Ministers must get tough on the energy giants and put the UK on the path to a clean and affordable energy future.”

Consumer group Which? also warned that homeowners may not have confidence in the government scheme and, if uptake of the Green Deal is low, may see higher energy bills in future.

“It’s difficult to see how hard-pressed homeowners will have confidence in how the Green Deal might work for them if the suggested savings are initially based on averages rather than on their personal energy use,” says executive director Richard Lloyd.

Eric Lounsbury of the Carbon Trust agrees that there need to be more incentives for taking part in the Green Deal.

“Among the options the Government should consider are discounts on business rates for improved energy efficiency, extending the proposed ban on F and G-rated buildings to cover owner-occupiers, and extending Display Energy Certificates to all large commercial properties,” he suggests.

For further information:
www.decc.gov.uk/en/content/cms/consultations/green_deal/green_deal.aspx
www.decc.gov.uk/en/content/cms/meeting_energy/aes/aes.aspx
www.cabinetoffice.gov.uk/resource-library/behaviour-change-and-energy-use
www.cbi.org.uk/
www.foe.co.uk/
www.which.co.uk/
www.carbontrust.co.uk/