The ‘energy bill’ introduced to Parliament in 2010 has now become law. The flagship policy of the bill is the ‘Green Deal’; a scheme that allows business & home owners to add energy efficiency measures to their premises for no upfront cost.

What is the Green Deal exactly?

The Green Deal is designed to cut energy usage across the country, reducing our impact on the environment. It sounds like a noble cause, but how does it work? The household or business has to go through a 3-step process to find out whether they’re eligible for finance via the Green Deal.

• Step 1: The ‘measure’ (for example; insulation, solar panels, under-floor heating etc) must meet the eligibility criteria that will be set at a later date.
• Step 2: The property in question will be assessed to ensure the measure is suitable for the property.
• Step 3: If the measure meets the ‘Golden Rule’ in the property, it may be approved for Green Deal finance.

What is the ‘Golden Rule’?

The Golden Rule simply means that the potential financial saving that could result from a measure being installed must be the same as, or higher than the cost of the installation of that measure.

For example (please note: this is a made up-example!), if it costs £10,000 to install under-floor heating in your shop, but you were projected to save approximately £10,000 on your energy bills over 30 years, you could be granted permission to have the heating installed with no upfront cost.

So how do I pay for the energy efficiency measures?

If you receive approval to install energy saving measures on the back of the Green Deal, you shouldn’t need to pay anything upfront.

Authorised companies will pay for and carry out the energy efficiency work on your property, but you will have to pay back the cost of the measure plus interest via a monthly charge on your energy bills. These payments will continue as long as you’re the tenant in the property, or until the cost is paid back.

This type of loan is unusual as, if you move to another property; the new tenant of the property you're moving from becomes responsible for paying back the cost.

When does the Green Deal come into effect?

The Green Deal isn’t available until Autumn 2012. Until then, watch the video below from the Department of Climate and Climate Change (DECC) to see what Nick Clegg has to say about the Green Deal, or read their official document outlining the deal.

To find out more about keeping energy costs under control, visit Make It Cheaper or phone 0800 035 9669