Green Deal loans to be underwritten by Government

Danny Alexander said said that there are over 30 expressions of interest so far in Green Deal infrastructure loans.

The Green Deal is to be an early candidate for UK Infrastructure Guarantees scheme, said Danny Alexander, Chief Secretary to the Treasury, last week.

In other Green Deal news:

• the register for Green Deal providers, assessors and installers has been opened
• a £7 million loan has been advanced to the Green Deal Finance Company (GDFC)
• and social landlords are being encouraged to take up the millions of pounds still on offer for Renewable Heat Premium Payment Scheme.

Infrastructure Guarantees

The Infrastructure Guarantees scheme is a new credit enhancement scheme set up to kick-start critical infrastructure projects by stimulating the injection of private finance with loans underwritten by the Government.

Mr. Alexander said that there are over 30 expressions of interest so far.

"The Green Deal is the largest ever programme for investing in the energy efficiency of our housing stock," Mr. Alexander told the Global Business Summit on infrastructure in London, “And we are looking at whether and how a guarantee could ensure that the finances are in place to get the programme off to a very strong start."

A spokesperson for the Department of Energy and Climate Change (DECC) said that it "is currently undertaking discussions with interested parties, such as the banks and investors on whether and how a guarantee could support the provision of low cost finance for Green Deal."

Attracting loan financing has been one of the stumbling blocks inhibiting the full launch of the scheme this October. The Institution of Civil Engineers (ICE)'s Director General, Nick Baveystock, expressed relief at the news: “When this scheme was announced, we and others across industry voiced concerns around whether the criteria for accessing guarantees were too high to attract applicants," he said.

"The news that there are over 30 expressions of interest so far is positive and we look forward to further updates from Government on which [other] projects it will be providing guarantees for.

“Reducing demand by making existing older homes more energy efficient is a vital if we are to have a resilient, affordable and low carbon energy system in future years," he added. But he cautioned that the government must make public "figures on exactly how many projects are actually moving forward as part of the scheme”.

DECC also announced yesterday that it has advanced a £7 million loan to the Green Deal Finance Company (GDFC), the not-for-profit company that will provide low-cost Green Deal finance to homeowners and businesses. Longer term, it expects to secure finance from the bond markets to ensure residents taking the Green Deal will be offered sufficiently low rates to attract their interest.

The GDFC is also in discussions to secure financing from the new Green Investment Bank (GIB). The GDFC's members include British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and SSE.

It was forced to suspend operations earlier in the summer because it had not been able to secure the funding it needed through UK Green Investments, which had been set up to provide funding ahead of the GIB receiving State Aid approval.

State Aid approval has still not been given but is expected by the end of the year.

Green Deal register

DECC also announced that it has opened the register for Green Deal providers, assessors and installers. This register will give the 'seal of approval' to businesses that successfully go through the Green Deal authorisation process.

A Green Deal Quality Mark will show who is authorised and protect consumers.

"The opening of the Green Deal register will enable businesses to start becoming Green Deal authorised and the Green Deal Quality Mark will show they have met our standards. Crucially, this will protect consumers, who will know that anyone displaying the Quality Mark has been through the required process to become authorized," said Energy Minister Greg Barker.

Anyone with questions about the guidance should contact the Green Deal Oversight and Registration Body on 020 7090 1031 or visit their website at www.decc.gov.uk/orb.

Businesses wishing to become Green Deal Providers can apply directly online, while accredited certification bodies will be able to submit the details of Assessors and Installers to be authorised.

Many housing associations are hoping to become Green Deal providers and include: Gentoo, Affinity Sutton, Places for People, Alliance Homes and the Aster Group.

Social landlords

These and other social landlords have also been encouraged to take up the millions of pounds still on offer for renewable heat.

This is under the Renewable Heat Premium Payment (RHPP) scheme, which had failed earlier in the year to disburse all of the funds at his disposal.

The competition is being reopened, with a millions of pounds available for social landlords to get kit such as biomass boilers, solar hot water panels and heat pumps into social tenants’ homes.

Energy and Climate Change Minister Greg Barker said: “I would urge social landlords across the nation to apply and take advantage of all this scheme has to offer.”

Registered providers for social housing, such as local authorities and social housing associations, can bid for funds up to the Sterling equivalent of €200,000, which currently amounts to around £156,000 each. Up to £2.5 million of additional funding will be allocated under this element of the competition.

£10 million for renewable heating for social housing tenants

Social housing landlords can now apply for grants of up to £175,000 to install solar hot water panels, heat pumps and biomass boilers into the homes of their tenants.

It follows the launch of a second round of the Renewable Heat Premium Payment (RHPP) scheme by the Department of Energy and Climate Change (DECC), with a total budget of £10 million.

It is expected that around 60 projects will win funding across England, Scotland, and Wales. Good news as it is, the budget will only benefit about 5,000 individuals, however, just 0.1% of the 3.9 million who live in social housing. The vast majority of these households live in fuel poverty and would welcome this type of help.

A further scheme targeted at communities who want to develop district renewable heating schemes will be launched later in the summer; interested participants can register for details here for when the announcement is made.

The closing date for applications for this round is July 4 and it is running on a first-come first-served basis; once the budget for the scheme is reached then applications will no longer be considered.

Eligible technologies include biomass boilers, solar thermal panels, ground source heat pumps, air-to-water heat pumps and water-to-water heat pumps.

“Last year our low carbon heating scheme for social landlords helped nearly 1000 householders stay warm and reap the benefits of clean, green heat,” said Energy and Climate Change Minister Greg Barker. “This year we have increased the cash available, which will help even more people move away from expensive old heating systems to low carbon, more sustainable alternatives.”

In the opening round last year, 37 social housing providers received a total of nearly £4.4 million. Only two of these were in Scotland and three in Wales. The rest were in England. One social landlord, New Linx Housing Trust, even received two grants. Just eleven received the total amount possible of £175,000.

Air source heat pumps were the most popular technology, probably because they are easiest to install. They represented 35% of installations, with solar water heating systems coming second at 33%. 19% of installations were ground source heat pumps and just 13% biomass boilers.

However, there are question marks over the efficiency of air source heat pumps compared to other forms of renewable heat.  In some circumstances they can cost more and emit more carbon than the form of heating that they may replace.

The scheme was welcomed by Philip Sellwood, Chief Executive of the Energy Saving Trust, which manages it and will evaluate the bids for funding. He said that it “offers real value to tenants as not only does it help them save money on their energy bills, but also helps them to reduce their energy usage”.

Criteria for funding include value for money, the type of fuel being replaced (with high carbon polluting fuel favoured), the presence of loft insulation to 250mm and cavity wall insulation (where practical), and the organisation's track record on delivering similar projects.

Those who have recently removed a mains gas heating system or currently heat their home with mains gas are only eligible to apply for solar thermal.

The amount of funding depends on the type of technology to be implemented:

Technology	Voucher Value
Solar Thermal Hot Water	£300
Air-to-Water Heat Pump	£850
Ground-Source or Water-Source Heat Pump	£1250
Biomass boiler	£950

Vincent Wedlock-Ward, Project Officer at Southern Housing Group (Isle of Wight Region), a previous social landlord competition winner, said that they received £175,000 from DECC under last year’s RHPP scheme. "This helped us replace old overnight storage heating systems with air source heat pumps for 40 householders living off the gas grid. Without this funding, this would not have been possible".

She reported that residents with the air source heat pumps fitted have found that their bills have been cut by half.

A programme of seminars is touring the country to explain what the scheme entails to local authorities and housing associations.

There is also an advice line on 0800 512 012 for more information. Winners will know whether they have been successful in early August.