The Government’s Green Deal Initiative was launched on 28th January 2013 with the task of encouraging homeowners and businesses to carry out energy efficient home improvements to their buildings. There are 45 different types of qualifying installations including cavity wall insulation, loft insulation and replacing old central heating boilers with new energy efficient condensing boilers.

The basis of the Green Deal is that loans are provided to cover the upfront cost of this work and they are repaid out of future saving in the energy bills which are achieved as a result of it. The Green Deal Golden Rule will apply which ensures that the cost of work which qualifies for the Green Deal will be more than covered by savings in future energy bills. This way, the Green Deal loan is repaid without any real contribution from the owner of the building.

The Government has allocated between £1 million and £2 million to promote awareness of the Green Deal and a marketing campaign in most national newspapers has been launched with the headline: Boiler burning money? Green Deal with it!

But is there an even better way than the Green Deal to have energy efficient insulation or improvements to your heating system carried out?

We believe that, for some, there most definitely is. Running alongside the Green Deal is the little publicised ‘Energy Companies Obligation’ or ECO, which for some households could offer a better solution to cold, poorly insulated homes with inefficient heating systems. Under the ECO scheme which compared to the Green Deal was quietly launched, energy companies have to make up to £1.3 billion per year available in grants.

ECO funding is designed to fill the gaps in the Green Deal Initiative by providing grants to cover work in hard-to-treat homes such as those with solid walls as they would probably fall foul of the Golden Rule Criteria. ECO funding is also available to cover the cost of energy efficient products to be installed for householders on certain state benefits and in areas with a high proportion on low income households. ECO grants do not cover the wide range of products and services which fall under the Green Deal but they do still include boiler upgrades, cavity wall insulation and loft insulation.

One of the Energy Companies’ Obligations is the Affordable Warmth Scheme which provides funding for private householders (owned and rented properties) who receive certain state benefits, to have a free boiler installed, as well as free cavity wall insulation, free loft insulation or free solid wall insulation.

The real advantage of ECO funding over the Green Deal for such homeowners is that although both schemes cover the upfront cost, under the ECO Affordable Warmth Scheme qualifying households DO NOT have to repay the upfront costs through their energy bills. This is because costs are covered by an ECO grant rather than a Green Deal loan. It is easy to assume therefore, that for energy companies to reduce their exposure to the provision funds under ECO, they would much prefer that householders who qualify under the ECO rules are faced with opting for the Green Deal due to the lack of ECO publicity.

A further advantage to households which qualify for ECO funding is that the initial survey required to confirm eligibility is carried out free of charge, whereas Green Deal applicants have to pay for a Green Deal Assessor to do a similar job. So there you have it, the Green Deal may be good for you but for private households who receive certain benefits, the ECO Affordable Warmth Scheme could be even better!