Lack of finance cripples commercial green deal

7th February 2013


Greendeal

Related Topics

Related tags

  • Business & Industry ,
  • Procurement ,
  • Management/saving

Author

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.

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

UK’s CCUS strategy based on outdated assumptions, government warned

The UK government’s carbon capture, usage and storage (CCUS) strategy is based on optimistic techno-economic assumptions that are now outdated, Carbon Tracker has warned.

13th March 2024

Read more

The UK government’s latest Public Attitudes Tracker has found broad support for efforts to tackle climate change, although there are significant concerns that bills will rise.

13th March 2024

Read more

A consortium including IEMA and the Good Homes Alliance have drafted a letter to UK government ministers expressing disappointment with the proposed Future Homes Standard.

26th February 2024

Read more

Global corporations such as Amazon and Google purchased a record 46 gigawatts (GW) of solar and wind energy last year, according to BloombergNEF (BNEF).

13th February 2024

Read more

Three-quarters of UK adults are concerned about the impact that climate change will have on their bills, according to polling commissioned by Positive Money.

13th February 2024

Read more

The reality of delivering net zero is that we need solutions tailored to specific areas. Peter Gudde explores models that local authorities could adopt

15th January 2024

Read more

Heat pump installations in UK homes increased by nearly a fifth last year, with over 200,000 now having been installed across the country.

11th January 2024

Read more

Last year was the warmest ever recorded, surpassing the previous annual high set in 2016 by a large margin, scientists have confirmed today.

9th January 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close