The Lighting Industry Federation welcomed the Second Reading of the Energy Bill, as it’s officially called. The centrepiece is the establishment of the Green Deal – a scheme to encourage energy efficiency improvements paid for by savings from energy bills, avoiding upfront costs to householders, private landlords and businesses.
The Green Deal is a solution to the problem of a current lack of investment in energy saving measures in homes and non-domestic buildings, resulting in many properties with poor energy efficiency ratings. This is despite the fact that investment in such measures can produce savings on future energy bills. The Green Deal aims to provide finance to fund fixed improvements to the energy efficiency of both domestic and non-domestic properties, which will provide savings for the bill payer.
The Green Deal will include a financial framework that enables energy saving measures to be paid for in instalments via the energy bill. The ‘Golden Rule’ of the bill is that the instalment payment for the energy saving measures should not exceed the projected cost savings on an average bill for the duration of the Green Deal Finance arrangement, which could be for as long as 25 years.
The Government will also oblige energy companies to help the poorest hoseholds and types of domestic property that are hard to treat.
Green Deal Finance will create a new legal mechanism allowing the obligation to repay the costs of energy efficiency measures to attach to the energy bill at a property, rather than to an individual. The obligation to pay will pass to the new occupier or bill payer should the applicant of the Green Deal move away.
‘At present we know that most people who expect to move again in the next 20 years or more are put off making large investment in energy efficiency because the costs are only affordable by factoring in savings generated after they expect to have moved,’ said a spokesman for the Department of Energy and Climate Change. ‘Green Deal will mean they only pay whilst they remain at the property enjoying the benefits.’
This scheme will let householders, private landlords and businesses pay for energy efficiency measures – such as a lighting refurb, new lamps or additional controls, without the need for up-front finance. Payments will be collected through energy bills. The Energy Bill will create powers allowing any tenant asking for reasonable energy efficiency improvements to receive them from 2015 onwards. It will also allow local authorities, to insist that landlords improve the worst performing homes.