Green Deal or a Bad Deal

The Green Deal is a sector wide initiative just like the NHS’s National Program for IT, only minus the massive funding. In fact funding for the Green Deal is no more complex than a railway franchise. So what can possibly go wrong?

Starting at the foundations and working upwards the Green Deal builds on the subsidised feed in tariff driven solar PV initiative. This itself enabled householders to generate electricity in the summer, when it was least needed: something that will be a real boon in twenty five years time when the low cost electricity storage is available. The financing of the solar PV initiative was structured in such away that it took money from people in fuel poverty and paid it out to wealthy householders as 10% return on their £10,000 investment in solar panels – a sort of high yield pension fund. The whole scheme was about as palatable and politically correct as a nationwide cull of kittens.

The economics of solar PV has not been especially good for the UK. Not having a photovoltaics industry of our own much of the money paid out for panels helped boost the Chinese and German green energy sectors. What it did create was a lot of pop-up companies that will disappear in the time it takes to remove a magnetic sign from the side of a van. These pop-up companies created a shortage of installers, which in turn forced up the costs for the rest of the UK’s secondary building sector. Established companies, such as secondary glazing specialists and conservatory suppliers, also came under pressure as solar panels replaced other forms of home improvements on the shopping list of anyone with £10,000 to spend.

The financing of the Green Deal has not moved very far away from the grand larceny model of the solar PV scheme. On the basis that you should never sign up to anything you do not understand, most householders will be taking the complex mix of assessments and loans on trust. The financing element also mitigates against participation by people who are not creditworthy or do not have fixed incomes, which covers many of those in fuel poverty and occupying houses that leak heat. Trading standards officers have already expressed concern over potential misselling of Green Deal packages and there is, as a consequence, likely to be a ban on doorstep selling.

A broad range of secondary building products are included in the Green Deal and this at least enables conservatory makers and the secondary glazing sector to participate in the program. However the array of technologies and energy reduction techniques on offer to the householder means it is unlikely one approach to the greening of the energy sector will achieve scale. Even if it does, it is unlikely this technology will be manufactured in the UK. Once again a major initiative will do nothing to reduce the country’s balance of payments – on the contrary, it is likely to send it further south. Additionally there is no coherent strategy within the Green Deal; are we eliminating fuel poverty, reducing gas imports, cutting carbon emission levels, lowering energy prices, or all of these?

The reason the scheme is so confused is in part down to a Department of Energy and Climate Change (DECC) that would like to lose the letters ‘CC’ and the Technology Strategy Board (TSB) that struggles with the letter ‘S’. In particular the problem at the heart of the Green Deal has its roots in DECC’s and TSB’s ‘Dragon’s Den’ approach to Green Energy innovation. Described in more detail in this article:-

Limits Of The Entrepreneurial Economy

When the government’s Department of Health launched the National Program for IT one journalist commented. “Great idea, it’s just a pity it won’t work.” Unfortunately the Green Deal is not even a great idea.

Peter Kruger

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