This entry is part 4 of 13 in the series Green Deal

The Green Deal Golden Rule

The DECC Guidance What measures does the green deal cover? July 2011 describes the golden rule as:

The key to whether a measure, or package of measures, is actually financed through the Green Deal is the ‘Golden Rule’.

The expected financial savings resulting from installing measures must be equal to or greater than the cost of repayment over the term of the Green Deal Plan. The repayment period may be the lifetime of the measure or a specified “pay-back” period. If the estimated annual saving is expected to be equal to or greater than the expected annual repayment costs, the Green Deal “plan” can be said to meet the Golden Rule and can go ahead. The Green Deal Provider should have the flexibility to vary costs to produce the best offer for the customer.

When a green deal assessor visits a property and estimates the savings on energy bills, each improvement must be costed and worked out individually. This is known as being “improvement specific”. To calculate the total annual savings for a green deal plan, all the savings made from all the individual improvements must be added together producing a sum of savings for the property.

The assessor must then consider how long the savings are likely to made over. To make this assessment in respect of the improvement, a green deal assessor must consider:

  • how long the improvement will last and continue to provide savings on energy bills; and
  • how long before repairs might be needed due to fair wear and tear; and
  • how long before repairs might cost more than the estimated savings; and
  • likely changes in the price of energy

The period of the green deal plan must not go beyond the estimated lifetime of the improvement or if those repairs might cost more than the savings of the improvement [2].

It is possible for a consumer to pay towards an improvement in order for it to meet the golden rule.

  • [2] Regulations 27 & 28 The Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) Regulations 2012  ↩

  • Series Navigation<< How the Green Deal Will Work||What Energy Savings Items Will be Included? >>

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