Funding for home energy efficiency improvements

There are several schemes that provide funding for home energy efficiency improvements in the UK. We give an outline of the top options below.

The Green Deal

The Green Deal (TGD) is a government scheme that gave loans for energy-efficient home improvements. After the original scheme closed in 2015, TGD opened for new applications again in 2017.

TGD was a government scheme that provided loans to households to finance energy-efficient home improvements. The government designed the loan so that savings made on energy bills would cover the initial cost.

The original scheme ran from 2013 to July 2015, when the government stopped supporting the Green Deal Finance Company. Some private companies continued offering Green Deal loans, however. In 2017, the Green Deal Finance Company began offering loans for selected energy-efficient home improvements again, backed by private investors.

What The Green Deal Funds

Green Deal loans are a way for homeowners to fund energy efficiency measures in their homes and pay them back through their energy bills. Loans are currently available for the following home energy improvements:

• New or replacement boilers (condensing and biomass)
• Insulation (solid wall, cavity wall, loft and floor)
• Heating, hot water and lighting controls
• Renewable energy generation, such as solar panels or heat pumps
• Fan-assisted storage heaters
• Flue gas recovery
• Draught proofing
• Innovative hot water systems
• Double glazing

The aim of the original Green Deal loan from the Green Deal Finance Company was to help spread payments for the upfront cost of energy efficiency measures, such as solid wall insulation, boilers and double glazing.

How The Green Deal Works

Green Deal loans work differently to a loan from a bank or other credit provider: You repay the Green Deal loan through your electricity bill payments. The golden rule of the Green Deal is that loan repayments should never exceed the savings you made on your energy bills.

However, this golden rule is not a guarantee that your bill savings matched your loan repayments. It’s based on estimates of a typical household’s energy usage and savings and doesn’t consider energy price rises. The loan is attached to the property you live in, not you. If you sell your home, it passes to the new owner.

According to the Green Deal Finance Company, there was a one-off loan fee of £63 and a £20 annual finance charge for every loan that was taken out. Green Deal providers had the option of absorbing this cost or passing it on to you. The Green Deal Finance Company loans had interest rates ranging from 7.9% APR to 10.3% APR and lasted between 10 and 25 years.

To find out more visit:

https://www.gov.uk/green-deal-energy-saving-measures

Energy Company Obligation: ECO3, 2018 to 2022 (ECO3)

The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain to tackle fuel poverty and help reduce carbon emissions. Under ECO, medium and larger energy suppliers fund the installation of energy efficiency measures in British households.

The ECO3 scheme consists of one distinct obligation: the Home Heating Cost Reduction Obligation (HHCRO). The HHCRO requires energy suppliers to promote the installation of measures that lead to financial savings on energy bills, such as the installation of insulation and heating measures.

ECO Eligibility

You are eligible for ECO if you are a core group customer from scheme year 9 onwards under the Warm Home Discount Scheme or receive at least one of the following benefits and satisfy the relevant income requirements, where applicable:

• Armed Forces Independence Payment
• Attendance Allowance
• Carer’s Allowance
• Child Benefit (on the condition that the household’s relevant income does not exceed the amount set out in Chapter 3 of our scheme guidance)
• Constant Attendance Allowance
• Disability Living Allowance
• Pension Guarantee Credit
• Income-related Employment and Support Allowance (ESA)
• Income-based Jobseeker’s Allowance (JSA)
• Income Support
• Industrial Injuries Disablement Benefit
• Mobility Supplement
• Personal Independence Payment
• Severe Disablement Allowance
• Tax Credits (Child Tax Credits and Working Tax Credits)
• Universal Credit

Alternatively, if you are living in social housing with an EPC rating of E, F or G you might also be eligible for the scheme. Social housing with an EPC rating of D can also qualify for an innovation measure.

You need to own your own home or have permission from your landlord to benefit from ECO3. If your property is owned by a social housing provider or management company, you will need to seek permission.

If you live in England or Wales and would like advice on energy efficiency, including energy-saving schemes such as ECO, which you may be able to benefit from visit:

https://www.simpleenergyadvice.org.uk/

If you live in Scotland, you should contact Home Energy Scotland on 0808 808 2282 or complete their contact form.

The Green Homes Grant (Local Authority Delivery Scheme)

The government launched the Green Homes Grant Local Authority Delivery scheme in August 2020. This £500 million scheme funds energy efficiency and low carbon heating projects for low-income households across England. It supports delivery of the target to reduce fuel poverty in England, the UK’s pathway to net zero by 2050 as well as stimulating the economic recovery following COVID-19, supporting, and creating green jobs. The Local Authority Delivery scheme aims to upgrade around 50,000 homes, saving consumers money on their energy bills, while making it easier to keep their homes warm.

The Local Authority Delivery Scheme is being delivered in Phases:

Phase 1A: grants of around £74 million were allocated to 55 projects which aimed to upgrade the energy efficiency of around 10,000 low-income households (household income below £30,000) in over 100 local authorities across all areas in England by the end of August 2021. 

Phase 1B: around £126 million of funding was allocated to 81 local authorities for delivery of energy efficiency projects by September 2021, aiming to upgrade around 15,000 homes. This included consortium bids submitted by a lead local authority that cover energy efficiency upgrades across multiple geographically related local authorities

Find out of your local authority was successful in securing funding for Phases 1a and 1b:

https://www.gov.uk/government/publications/green-homes-grant-local-authority-delivery-successful-local-authorities

How we can help

Building Energy Experts get involved in every type of energy efficiency project, irrespective of how they are funded. Get in touch to learn more about how we can help you save money and cut carbon.