Lack of finance cripples commercial green deal

7th February 2013


Greendeal

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  • Procurement ,
  • Management/saving

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IEMA

Businesses wanting to take advantage of the green deal to improve the energy efficiency of their properties will struggle to find a provider willing to work with them, the environmentalist has found

Of the 24 firms listed on the official green deal website (greendealorb.co.uk) as offering the scheme for commercial properties, just two have confirmed that they could potentially offer assessment and installation services to businesses.

Under the government’s flagship energy-efficiency scheme, which launched on 28 January, homeowners and businesses can have their property’s energy efficiency independently assessed, and then pay for recommended energy-efficiency measures (such as the installation of wall insulation, new glazing or better heating equipment) through payments incorporated into future energy bills for the building. To be eligible for a green deal plan, cost savings achieved must be more than the loan repayments.

However, the Green Deal Finance Company (GDFC) – an independent organisation created by the government to underwrite loans made by green deal providers and to set interest rates – is only providing finance for domestic projects. “At the moment the company is simply not in a position to offer rates for commercial property and won’t be for at least six months,” a GDFC spokesperson confirmed.

This leaves green deal providers having to underwrite the loans themselves, or ask clients to find other ways to finance the project. As a result, many of the companies listed as offering green deal services to businesses are not doing so, because they are still awaiting GDFC support.

Of the 20 providers contacted by the environmentalist, six said they hoped to offer commercial services later in the year, and six other others said they might offer plans to businesses in future. All confirmed their prime focus was the domestic scheme.

“We can offer the commercial green deal as a pay-upfront project, but not with payments through energy bills at the moment,” confirmed Lucy Shadbolt, head of green deal at provider Instagroup. “However, our focus is 99% on the domestic sector, because the green deal is a very complicated proposition that we need to get set up and working.”

Another factor contributing to the delay in the rollout of the commercial scheme could be a lack of qualified assessors, according to sources in the sector. Commercial assessments are more complex than those for domestic properties, and assessors require additional qualifications. With the domestic sector seen as providing the greatest businesses opportunities, the bulk of green deal assessors are accredited only to assess homes.

Despite the green deal being consistently labelled as an initiative to help businesses and homeowners, concerns were raised last year that DECC was more focused on households. Initially the energy department said the commercial side of the green deal would not rollout alongside the domestic side, although this later changed.

At the same time as DECC launched the green deal, the Royal Bank of Scotland (RBS) revealed that will launch an energy-efficiency loan scheme for small businesses.

Similar to the green deal, RBS will offer firms an energy-efficiency audit providing advice on potential saving measures, and then a loan to pay for the work – ensuring that repayments are lower than the savings achieved on energy bills. The bank will be offering interest rates of around 5% – considerably lower than the 7.67%–7.96% rates offered to homeowners under the green deal.

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