Boilers dominate early days of Green Deal

In Budget 2011 Chancellor George Osborne promised that he “will act to encourage and incentivise take-up” of the Green Deal. To date, the only scheme is a short-term one, ending next March. It provides cashbacks for households where certain energy saving measures are installed.

To qualify, overall funding does not have to be provided via the Green Deal Finance Company. But at present all potential beneficiaries are required to purchase a Green Deal Assessment. Importantly they also must have any measures installed by accredited Green Deal Providers. This means that local builders or heating engineers are effectively excluded from the scheme, other than as sub-contractors.

Householders can receive £100 towards more loft insulation, £250 or £600 for cavity or solid wall insulation – and £270 against a replacement boiler. British Gas has been including this latest offer in a widespread advertising campaign for its heating service division. No mention is made of the Green Deal.

In the first 20 weeks of the scheme, which began in January, there have been 968 cashbacks claimed costing £263, 452. Of these, practically all are for £270 for a gas boiler replacement. The overall average claim is for £272, reflecting that a handful of claims have been for solid wall insulation too.

Around £125m has been allocated from public funds to the cashback scheme. With only nine months to go, this means that the potential for a major increase in demand is anticipated. Instead of limiting to just an average monthly expenditure of just £55,000, the existing official budget allows for over £13m to be claimed each month.

Were the boiler market to continue to dominate as now, this could mean that as many as 455,000 boilers could be installed over the next nine months, each with the £270 cashback subsidy.

Currently just 1.4m new boilers are installed each year. Ministers will be watching to see how many more are installed over the next nine months. They will wish to avoid any accusations of funding work via the Cashback scheme that would have taken place regardless.

A call has been made unanimously by the official Green Deal Installer Forum – which DECC sits on – to recommend the removal of the delivery monopoly for registered Green Deal Providers.