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Green Deal or no deal? Upfront fees deterring homeowners

Has the Green Deal failed before it’s even started?

The government’s strategy to help boost energy efficiency in the UK and ultimately lower energy bills is likely to stall because customers are unprepared to fork out upfront fees.

That is the opinion of both MPs and consumer groups, who argue that the assessment fees alone may deter homeowners who would otherwise be interested in taking part in the initiative.

The Green Deal allows people to take out loans to pay for the cost of installing insulation and other energy efficiency measures – the cost is then intended to be offset in the mid to long term through reduced energy bills.

However, many of the companies that have signed up as domestic assessors for the schemes are charging in the region of £100 to evaluate the suitability of properties for energy efficient upgrades.

These charges – rising to £150 in some cases – are unlikely to sway those sitting on the fence and unsure of whether to commit to the deal, says shadow climate change minister Luciana Berger.

A good deal

Speaking to the Guardian, she said that the only way the Green Deal can succeed is if it offers a good deal to the public.

“It’s unlikely that most people will think that paying £100 before they can even decide if they want to take out a Green Deal package is worth doing,” she said.

“Charging such a high fee is likely to deter those on low incomes and pensioners – exactly the people who could benefit most from installing energy efficiency measures.”

The figures were backed up by a Guardian survey which showed that simply arranging for an assessment may be a complicated process.

The newspaper contacted all 24 companies listed as domestic assessors for the Green Deal and discovered that six could not be contacted, while 11 were incapable of answering questions about the scheme.

Just one (Mark Group) had all the answers and pledged to carry out the assessment for free, with five other organisations charging between £95 and £150 for an upfront assessment, though two would refund this if customers had the work carried out by them.

One of the companies – Carbon Low – had even been mistakenly listed as a provider on the government website, despite not carrying out residential assessments.

More clarity needed

The lack of certainty, upfront costs and confusion over what the scheme entails is unlikely to achieve the government’s aim of boosting interest in the Green Deal, said Audrey Gallacher, director of energy at Consumer Focus.

“You could argue finance with interest rates attached and an upfront fee for the survey may put some people off this scheme, even though it would save money in the long term,” she elaborated.

As other schemes have offered to give insulation away for free and still struggled to succeed, expecting people to secure finance will be a “challenge”, Ms Gallacher added.

“Nobody could argue with the good intentions of the Green Deal, but practically it will probably face quite a few difficulties.”

Another challenge may be a lack of high-profile companies offering to carry out assessments, with British Gas currently the only one of the Big Six on the list – and also asking for £99 for an assessment.

According to Ms Berger, the coalition said it did not expect energy companies to charge for assessments, when quizzed by Labour in the Commons last year.

“It’s now clear they were wrong and their mistake could seriously lower Green Deal take-up,” she added.

Time to take action

It is now vital that the Department of Energy and Climate Change (DECC) takes action to lower or eliminate the cost of upfront assessments, or the scheme risks fizzling out before it really gets going, the shadow climate change minister asserted.

The government remains defiant, with a DECC spokesman arguing that the Green Deal puts the customer in charge, and claiming a variety of different offers being launched in the coming months will allow people to secure the best possible deal.

“As Green Deal plans become available in January, it is likely that some providers will offer free assessments as a way to attract customers while others may charge for it initially and reimburse it as part of a Green Deal,” he added.

The government representative also pledged separate support for low-income households, which he said will be able to benefit from mandated help from their energy supplier, without the need for an assessment to take place.

The key for the government and domestic assessors may simply be raising awareness of the scheme’s existence.

Last month, Energy UK chief executive Angela Knight bemoaned the lack of public awareness and said this is unlikely to improve in the near future unless more is done to promote the initiative.

It seems the government has work to do if it is to prevent households from saying “no deal” to the Green Deal.

  • David Mitchell

    Hi – this is a re-hash of another article posted recently. What you fail to point out is that prospective customers can go through a pre-assessment before deciding to book an appt with an Advisor thereby being able to evaluate the potential benefits before mtg.

    The customer can also add the report cost into the Green Deal Finance package. The Green Deal scheme is focused on helping the UK home owners save money on energy costs. Like interest free loans there is no such thing as a FREE report – the cost will be picked up somewhere and added into the customers Green Deal plan. By paying for the report the customer has choices….

    Another error in your article is that Assessors do not carry out the ‘work’. The Finance and installation of accepted recommendations can only be completed by duly authorised Green Deal Providers.

    The role of the Assessors organisations is to ‘Assess’ the Green Deal Advisors who are registered with them. Also you missed out the fact that there is a 2.9m advertising fund to support the launch of the Green Deal.

    • Maya uSwitch

      Hi,

      Good point about the 2.9m advertising and pre-assessment. However, I wonder if perhaps a pre-assessment before an assessment before having work carried out might also be seen by some as a deterrent?

      Although you rightly point out the processes set up to make the costs affordable, this article is simply pointing out the deterrents to customers as found by the Guardian and the shadow climate change minister. For many the prospect of a £150 charge, absorbed or not absorbed by the subsequent work, can seem galling.

      Also, the point you make about work refers to what the Guardian was told by two assessors.

      Hopefully the advertising money will go a long way to making sure all customers are informed and the details ironed out before the official launch, we think it’s a great way of cutting your bills!

      Maya

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