The Green Deal provides a framework of accredited market participants, through which people pay for some of the cost of improving their homes and businesses using a type of loan that is paid back with the savings they can expect to make on their fuel bills. Prior to signing a Green Deal Plan, an assessor will recommend improvements that are appropriate for a property and indicate whether they can be expected to pay for themselves through reduced energy bills. Green Deal Providers (the companies offering loans) will discuss with the consumer whether a Green Deal Plan is right for him/her and provide a quote for the recommended improvements. Consumers can get as many quotes as they like, and they do not have to choose all of the recommendations made to them. Once they have chosen a Green Deal Provider, the Provider will write up a Green Deal Plan.
The plan is a contract between the consumer and the Provider – it sets out the work that will be done and the repayments. Installation must be carried out by an authorised installer. The Green Deal Provider will help calculate the repayments, including interest, which the consumer will need to make. While the repayments should be no more than what a typical bill-payer should save, the actual savings will depend on how much energy the consumer uses and the future costs of energy. If the consumer moves, the new bill-payer will benefit from the improvements, and so will take on the repayments.
A requirement on larger energy suppliers – the Energy Company Obligation (ECO) – will work alongside the Green Deal to provide additional support for viable packages of energy efficiency measures that are unlikely to be fully financed by the Green Deal. These packages could include insulation of hard-to-treat cavities or solid walls. The ECO will also provide insulation and heating measures to low-income and vulnerable households and insulation measures to low income communities.
An innovative brokerage system has been put in place to extend the availability of ECO funding beyond the energy companies themselves. By 2020 the Green Deal and ECO could save UK homes and businesses 4.5 MtCO2 per year.