After consultation with the European Commission, DECC yesterday confirmed exactly how the Green Deal works in conjunction with the Feed-In Tariff and Renewable Heat Incentive, the two schemes that pay homeowners to generate their own electricity and heat respectively using renewable energy technologies such as solar panels.
When someone applying for a Green Deal gets their Green Deal Assessment done, the assessor works out whether each improvement that could be made to the house meets the Golden Rule. This Golden Rule states that the monthly repayment you would have to make to pay back the loan for a certain improvement should not be more than how much the improvement saves you every month on your energy bills. DECC have decided that people can sign up to the Green Deal and the FIT as long as the payments from the two schemes are not counted as ‘savings’ in the calculation, as doing so would effectively mean that the Government was at least partially paying back it’s own loans.
This means that anyone installing or running domestic solar PV panels, micro-CHP or a wind turbine can, in theory, do so at no upfront cost and receive FIT payments. This is not the case in reality just yet, however, as none of these technologies are currently likely to meet the Golden Rule without the FIT subsidies. As a result, the Green Deal currently only partially funds these improvements in most cases. It’s likely that these improvements may only be able to be funded fully by the a Green Deal loan when they will be able to pay for themselves within a reasonably short period of time, at which point the FIT and RHI subsidies will no longer be necessary.
The RHI will probably work with the Green Deal in the same way as the FIT, but this has yet to be decided as the final details of the RHI are worked out ready for its launch in Summer 2013.
You can find out if your home could benefit from a FIT improvement such as solar panels by taking our online assessment – it’s free, takes 2 minutes and gives you tailored energy saving figures for your house!