Energy Giants Back Green Deal Finance

12 April 2013

The ‘Big Six’ UK energy suppliers are amongst those backing the Government’s latest energy efficiency scheme, according to the Green Deal Finance Company (GDFC).

The GDFC released information this week describing a pecuniary agreement that has raised £244m to be used in funding the Green Deal. The list of benefactors includes British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE.

The agreement was signed on 12th March.

Pooling Funds

The £244m sum – which will be used to set-up, finance and administrate the energy efficiency scheme – has been collected by the GDFC in order to move forward with plans to improve the energy efficiency of England, Wales and Scotland.

According to the GDFC, £69m – 28% of the total sum – has been funded in the form of Stakeholder Loans and Junior Capital by a group of 16 members, most with ties to the Green Deal.

The full list of 16 investors is as follows: British Gas, Carillion, CertiNergy, CIGA, the Department for Energy & Climate Change, Domestic and General Insulation, EDF Energy, E.ON, Gentoo, InstaGroup, Kingfisher, Newcastle City Council, RWE npower, PricewaterhouseCoopers LLP, SSE, and Scottish Power.

The Depart for Energy & Climate Change (DECC) has also committed a further £50m, with £20m coming in the form of a Junior Capital Facility and £30m from a Contingent Capital Facility.

The remaining £125m has been provided in the form of a Senior Debt Facility from the UK Green Investment Bank.

The GDFC will look to boost the total sum to £300m with a loan from the European Investment Bank, discussions about which have already begun.

Insulate to Save

With the agreement in place, the Green Deal – which was launched on 28th January – can now be rolled out properly.

We can now offer Green Deal Providers a one-stop-shop to set-up, finance and administer Green Deal Plans,” stated Mark Bayley, Chief Executive of the Green Deal Financial Company following news of the agreement.

“This package will provide very long-term and low-cost funding to enable householders across all parts of the country to finance energy efficiency improvements to their homes.”

These energy efficiency improvements include Loft Insulation and Cavity Wall Insulation, amongst more than 40 other measures.

Those householders looking to install or improve Loft Insulation and Cavity Wall Insulation under the Green Deal will first require a Green Deal Assessment, before a Green Deal Plan is put into place. The financial agreement means these plans can now be completed, something that was not possibly before.

Householders taking out a Green Deal Plan can expect to pay an interest rate of 6.96% per annum.

An initial set-up charge of £69 and an annual operating charge of £20 will also be required, but under the scheme’s ‘Golden Rule’, the cost of repayment must not exceed that of the savings made. This ensures that those taking up the scheme will not be disadvantaged financially.

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