An industry-led consortium investigating how to finance the best value Green Deal option for consumers has been created.
The consortium has signed a Memorandum of Understanding (MOU) to develop the business plan for a not-for-profit organisation, The Green Deal Finance Company (TGDFC), to finance the best value Green Deal option for consumers.
The MOU signatories include British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and SSE.
The consortium is already working closely with DECC, the European Investment Bank (EIB) and local authorities, with a view to maximising its assistance to the Green Deal market.
Over the next few months many more new associate members are expected to join the consortium, including suppliers, installers, providers, local authorities, and industry and consumer representative bodies.
The GDFC will be a national aggregator that can provide finance to all Green Deal Providers on an equal and open basis. By operating at a national level, it will minimise the operating and administration costs of Green Deal work and will quickly be able to access the cheapest sources of finance in the market at the highest possible credit rating.
Paul Davies, PwC lead partner on The Green Deal Finance Company, said: “The success of The Green Deal Finance Company will be a fundamental building block in the overall success of the Green Deal programme.
“By minimising the cost of finance to future accredited Green Deal providers, it will create a highly competitive market that will compete on cost, reliability, lifespan and technology.
“It will maximise the measures that can be included within the Green Deal and for many potential providers will solve the question of where their finance will come from.”
Its membership, once operational, will be open to all interested parties in the sector and is intended to be representative of the whole market.
Energy secretary Chris Huhne said: “This is an exciting initiative with the potential to reduce interest rates on Green Deal finance, while also supporting healthy competition amongst Green Deal providers including small businesses.
“New firms like the Green Deal Finance Company are testament to the attractiveness of the Green Deal framework and its potential to offer a better deal to consumers.”
A quarter of the UK’s carbon emissions come from the energy used to heat homes and a similar amount comes from our businesses, industry and workplaces.
As a major contributor to the UK’s carbon reduction targets set out in the Climate Change Act, emissions need to be dramatically cut emissions in our homes and communities from 2008 levels.
The Green Deal is a government-sponsored framework to allow private firms to offer all UK consumers (households, communities and workplaces) energy-efficient improvements to their buildings.
Consumers will pay back the cost of such improvements through the resulting savings in their energy bills. At the heart of the Green Deal is the rule that savings on bills will exceed the cost of the work.
By meeting this golden rule, customers will get energy savings for free. At the heart of the Green Deal is the rule that the estimated savings on bills should exceed the repayment charges.
Improvements could include measures such as loft and cavity wall insulation, innovative hot water systems, condensing boilers and may also include more costly measures such as solar thermal energy or solid wall insulation.
A key part of making the Green Deal work is that future Green Deal providers – the companies that will install these improvements – can access the cheapest possible underlying source of finance, to maximise the value they can bring to customers.