The Department of Energy and Climate Change (DECC) recently announced several changes to the existing Green Deal Cashback Scheme (operating in England and Wales), which rewards consumers for taking action to improve the energy efficiency of their homes through the Green Deal. These changes were the result of feedback received from industry and consumers on how the scheme could be made more attractive to increase energy efficiency in households.
A quick recap of the changes: –
- The scheme will be open for new applications until 30 June 2014. Vouchers will have a validity period of three months, or six months for Solid Wall Insulation (SWI). However, all work must be completed and vouchers redeemed by 30 September 2014.
- The rates have changed for some items: Eg, SWI changes from £650 up to £4000. These new rates will apply to applications made or redeemed on or after 13 December and the Cashback Administrator will contact people affected by this.
- An increase in the customer’s contribution cap from half to two thirds, bringing more households within reach of the maximum cashback rates for each measure.
- For customers who do not want to take out a Green Deal Plan to make energy efficiency improvements the Government has removed the requirements for Guarantees and Insurance Backing for all measures except for cavity and solid wall insulation.
- Customers will not be able to claim cashback for packages of measures that include a contribution from Green Deal Communities schemes, and from April 1, customers will not be able claim cashback for packages of improvements that include an ECO contribution.
WHY THE CHANGE TO BLENDING ECO AND CASHBACK?
DECC wants incentives to drive a greater uptake of energy efficiency measures than would otherwise be the case, and ECO companies already have ECO targets which they are obliged by law to meet. It is important that ECO costs are no higher than they need to be. The changes to ECO proposed in December 2013, DECC is now currently Consulting on and aim to reduce costs to the energy companies.
By keeping the funding streams separate, DECC is avoiding the possibility that cashback simply represents taxpayer subsidy of what the energy companies would be doing anyway, reducing their costs still further without producing any additional benefits to households.
WHAT WILL THIS MEAN FOR PROVIDERS?
DECC intends to make changes to the Cashback Customer Terms and Conditions to reflect the changes in eligibility criteria, and they are writing to the Green Deal Providers regarding potential changes to the Provider Terms and Conditions.
Cashback vouchers are already based on the customer’s contribution costs excluding any ECO discount applied, and based on the quotation that the Provider gives to the customer for the work.
Changes to cashback apply to the Cashback Terms and Conditions only. The arrangements between Energy Suppliers and Providers regarding ECO is a matter for them.
WON’T THIS CHANGE MAKE IT CHALLENGING TO ENCOURAGE MORE COSTLY IMPROVEMENTS SUCH AS SOLID WALL INSULATION?
DECC has revised the rates of cashback on offer to better reflect the costs that customers incur in installing measures and as such the increased Solid Wall Inspections (SWI) rates will make it more attractive to consumers, especially as part of a Green Deal finance plan.
For example: (all costs are illustrative)
- Cost to install SWI £7000
- Cashback available (up to max of) £4000
- Difference £3000, which can be paid for through a combination of a Green Deal Plan and/or savings or other finance routes.
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