Save £10,000 on your energy bill
The government wants to help you save money and save the planet at the same time. So what's the catch?
The government has just announced plans that could make it cheaper and easier for homeowners to pay for energy-saving measures.
Energy secretary Ed Miliband aims to slash carbon emissions from UK homes by 29% over the next ten years. And to help hit this target, he’s announced a package of measures to make Britain’s homes ‘greener and warmer’.
Here, I’m going to look at one of main parts of the scheme, and find out whether it really could help you save money and the planet at the same time.
What is the PAYS scheme?
A major element of the package announced will be a Pay As You Save (PAYS) scheme, providing ‘green home loans’. These loans will fund energy-saving measures like loft insulation and the installation of solar panels.
The interesting bit is the proposed repayment structure: homeowners taking out these loans will be allowed to pay them back over a period of up to 25 years, using the savings they’ve made on their energy bills.
Consumers will apply for these loans (of up to £10,000) though their local authorities, supermarkets and DIY chains. Major retailers and energy providers may decide to offer complete home insulation packages, as well as individual energy-saving measures - like the installation of a smart meter.
What if you move house?
Nowadays, very few people live in the same home all their adult lives. And people moving house a few years after taking out one of these loans may not have long enough to recoup the cost in energy savings and pay it back.
To avoid this problem, the plans propose that each loan will be linked a particular home, rather than to a particular person.
Because of this, people moving into a new home would need to consider the green repayments that come with it, as well as the energy-efficient measures that have already been installed.
What are the benefits?
The main benefit of the proposed PAYS scheme is that many homeowners would be able to avoid the large upfront costs associated with energy-efficient home improvements.
At the moment, major energy-saving measures - like large-scale insulation or solar panel installation - can end up costing hundreds or even thousands of pounds.
The government is also keen to stress the employment benefits associated with its proposed package: it claims its new ‘green strategy’ will create 65,000 jobs in the green home industry.
How much could you save?
In theory, homeowners taking out PAYS loans wouldn’t be worse off on a day-to-day basis, because the energy savings made would be at least equal to the repayments they were making.
Of course, individual savings would depend entirely on the work you had done. For example, according to the Energy Saving Trust, the installation of decent loft insulation alone could save you around £150 per year.
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Are there any downsides?
As part of the wider ‘green strategy’ package, the Department of Energy & Climate Change (DECC) does say it will “direct help to those that need it most”, with energy companies targeting work towards lower income groups.
However, there is criticism that the PAYS scheme itself will only help homeowners in a financial position to repay the loans. For many people in fuel poverty, their first priority is cutting back their energy costs immediately.
And it’s still unclear how PAYS loans would help people in the private-rented sector, whose landlords have no incentive to improve the energy efficiency of the buildings they let.
Where can you get one?
PAYS loans have already been piloted in around 500 homes in London, Birmingham, Sunderland and Stroud. However, it seems it will be a few years before these green loans will be coming to properties near you.
Earlier today, a DECC spokesperson told me that the PAYS scheme needs legislation before it can be introduced, so the details of how to apply aren’t yet available. However, the idea is to “encourage implementation of PAYS from 2012”.
Of course, there’s the small matter of a general election before then - so PAYS may never get the point of implementation.
What do you think? Does PAYS sound like a good idea? Would you consider taking out a green home loan? Leave a comment here and let us know.
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Great question! "Is The Government really so generous?" You can save a lot of money installing solar panels... How ever for every £ given away by government... someone will have to pay. Everyone who wont install solar panels.. loses and have to pay for people who install them. Did anyone read news about increasing bills? Electricity Gas and Water prices going up again. (how nice) By TudorSolar http://www.tudorsolar.com (Your solar panel installers)
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Mick James, You are missing the point. That collection of energy and clean water savings tips, yes, does have some very good examples of how reducing the amount of energy used in and around the home does not have to be complex nor does it have to cost much if at all in order to save money. However, it also does not have to be stuff shirted and serious. Energy conservation can also be done with a sense of humour (notice the spelling of that word.......I'm not from America....bad assumption, mate) and can be fun while at the same time save money. It is something that absolutely anyone can do; all it takes is action. And, if its fun at the same time so much the better! The more something is enjoyable the more likely it will be repeated. Dan
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I always seem to get myself involved with these discussions on this site, mainly due to the amount of misinformation or half truths that are firstly written by the authors then followed through by those on the discussion board. Firstly the government announced it's renewable energy policy for domestic homes with in the whole of the UK in its warm homes greener homes document this week. http://www.decc.gov.uk/media/viewfile.ashx?filepath=what we do/supporting consumers/1_20100302094227_e_@@_warmhomesgreenerhomesastrategyforhouseholdenergymanagement.pdf&filetype=4. Within this document it out lines how it envisages the policy to work in relation to all technologies including solar thermal, heat pumps, biomass, bioliquid etc. This document also covers things such as home insulation. Now if you can be bothered to read the document as I have, you will find mention of MCS (Micro generation certification scheme) for you as a house holder or land lord to qualify for FIT (Feed in Tariff) or RHI (Renewable Heat Initiative) both product and installer must be MCS approved. (Please note that solar thermal panels can also be Solar Keymark to qualify for RHI payments) [url=http://www.microgenerationcertification.org/]http://www.microgenerationcertification.org/[/url] If one or the other is not MCS approved you will [b]not[/b] qualify to receive any funding and this in effect means that the pay back on your investment will take considerably longer or in fact never. This clearly is very important and a fact that many out with the industry do not know, and many with in the industry chose not to tell as they have neither product or installation approval. It is not illegal to manufacture, supply or fit non MCS approved product. I can not stress to you enough the importance of MCS it could cost you thousands of pounds over as long as 25 years if you get this wrong. Personally I do not think this is brought to the fore enough, but any financial journalist writing on this subject should at the very least mention this fact as this is key to any return on investment. Regardless of which party wins this and other elections the UK is treaty bound to honour it's climate commitments with punitive penalties if it fails, there is little to no difference in policy between the parties on this subject because of this. As a senior civil servant at the Department of Energy & Climate Control said to a conference that I attended recently, [i]that to go backwards on this now would cause substantial delays, delays that a country which is already behind schedule can ill afford and that this was beyond party politics. [/i] I'm not going to argue here again about renewable technologies and the fact that if installed correctly in a well designed system they do work and will save you money on your energy bill. I'm fed up with the unqualified nay sayers, please your self as I know differently having worked with the technologies for more than 30 years and have seen the huge difference they make in running costs. For land lords both the FIT & RIH would be claimed by you or part of these payments can go to your tenant if you wish to share, as this could be used to increase the desirability of renting your property. On a note for doing nothing, in a consultation paper I have seen regarding the RHI's the government is talking about giving local authorities tax raising powers to penalise poor energy rated properties, do with that information also as you please.
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22 September 2011