In Parliament >> Green Deal - masterstroke or damp squib?

Alan Whitehead, MP for Southampton West, discusses the problem of take-up when it comes to investing in energy efficiency.

The Energy Bill aims to tackle the pressing issue of energy efficiency in Britain’s homes by addressing head-on the problem of take-up: how do you get the millions of homes still falling woefully short on home energy measures to retrofit both for the good of the householder and the nation’s energy demand levels?

Capital investment upfront puts too many people off investing in energy efficiency.

The planned “Green Deal” seeks to get over this problem by splitting the benefits so that the householder has nothing to pay upfront: an interested company, such as B&Q, puts in the cash for improvements, and via a charge on the energy bill of the property – not the inhabitant – recovers its money and makes something besides.

The householder gets lower bills and a more efficient home. But it is in this split that the problems begin.

In order to get a return on investment, a company providing the capital will want a reasonable rate of return, and the government has already announced that the “deal” will turn on a “golden rule” – the householder’s energy bills will not be higher after the work than before it.

These two factors radically limit the amount that can go into the house and what the money will purchase – mostly restricted to worthwhile but not earthshattering additions, such as wall and loft insulation.

Home-based power generation will be out, and the seven million or so “hard to treat” properties – solid walled and often off grid – will be a long way from inclusion.

In short, in seeking to move home energy efficiency forward through cost-neutral investment from the private sector, the government risks the deal turning out to be a damp squib of a measure, even if the investors can be found in the current difficult economic climate.