Could the Green Deal be in trouble? One of the providers – ‘big six’ energy supplier npower – has said the interest rates of 7% or more were too high, just days after the scheme was launched.
The Green Deal offers households the opportunity to take up energy-efficiency measures without any upfront costs. Instead you take out a loan linked to your property, with the repayments covered by the savings made on energy bills.
However, speaking to The Daily Telegraph the npower chief executive Paul Massara said the rates rates were too high and that they would have to be below 7% to be competitive.
In response a DECC spokesman said: “Interest rates on the Green Deal, which are not set by government, are very competitive. But to focus on the interest rate is to miss the point.
“This is a completely different kind of loan where you can borrow and still not be worse off.”
Green Deal financing
The Green Deal will be funded by the government’s Green Deal Finance Company which will lend money to providers like npower.
However, you don’t need to take out a Green Deal loan to pay for the upgrades. You could choose to increase your mortgage to pay for the energy efficiency measures, or you could take out a personal loan.
Alternatively, if the cost of the work is around £1,000 or less, you could take out a 0% on purchase credit card to pay for it, although you will need a good credit rating to be eligible.
Speaking to The Daily Telegraph, Mark Bayley, chief executive of the Green Deal Finance Company, said: “The interest rate for Green Deal Plans is comparable to the best high street rates for long-term unsecured loans.
“Whereas high street loans are not widely available for much more than 5 years, the minimum Green Deal Plan term is 10 years and we will be offering Plans out to 25 years.
“And while high street loans are accessible to barely half of the population, over 80% of the population can access Green Deal finance.”
Green deal loan – Learn how the Green Deal loan system works.
Green deal assessor – How to arrange for a Green Deal assessor and how assessments work.