A task group charged with coming up with proposals to make the Green Deal more financially attractive hopes to present a series of proposals to the government by January.
The task force, convened by the UK Green Building Council, met for the first time on Thursday to explore how interest rates might be reduced after widespread criticism. The current rate being offered by the Green Deal Finance Company is 6.96%, with the APR for Green Deal Plans ranging from 7.9% to 10.3%.
Although these rates are competitive for long-term fixed rate lending, they have been highlighted as a potential barrier to households taking out Green Deal Finance. Reducing the interest rate could allow more measures to meet the scheme’s “Golden Rule” principle that energy savings must outweigh the cost of implementation and potentially reduce the need for customers to make any upfront payments.
The task group will also investigate the way Green Deal Finance is communicated to the public.
Christoph Harwood, partner at Marksman Consulting and chair of the task group, said: “We aim to take a practical view on Green Deal interest rates and help policymakers understand their options. We are unlikely to come out with a silver bullet solution but what I hope we can do is inform the debate.”
Richard Twinn, policy and public affairs officer at UK-GBC, said: “It is no secret that the Green Deal has got off to a slow start, with the cost of finance repeatedly blamed.
“It is essential that we now shift the debate onto finding solutions so that we can make the Green Deal a success.”
The Green Deal Finance Task Group includes around 15 companies including Adca Investments Bank of America Merrill Lynch, Carillion, Gentoo, Keepmoat and The Green Deal Finance Company (observer).
Twinn said that the taskforce would explore both how perceptions about the loan arrangements could be shifted as well as options for reducing the interest rates.
“It’s difficult to communicate the interest rate and position properly the Green Deal because there is nothing else like it out on the market. It is not a loan as such, more of a long-term charge on the property.”
Options being looked at include exploring whether aspects of the Green Deal policy were producing a higher interest rate, whether rather than a fixed loan there could be an element of variable rate interest and whether ECO could provide an element of interest rate subsidy.
News of the taskforce comes as new government figures showed that 57 projects had been completed under the Green Deal.
