The new innovative 'Green Deal' financial mechanism is due to come into force later this year (autumn). But, is it worth waiting for? Is the Green Deal the best deal for you? Is there still time to take action now, before the Green Deal comes into force?

Well, let me start by explaining what I understand the Green Deal will be, as it's set to be revolutionary, and brings new laws into place. Basically, it is a low-interest loan scheme for energy saving measures, so eliminates the need to pay upfront. Payback of the loan will come from a proportion of the energy savings that the householder receives as a result of having the work done, and the golden rule states that that must occur within a 25 year period, otherwise the project won't be allowed under the Green Deal conditions. The loan is attached to the meter point (electricity meter) - that's the revolutionary bit - so if the householder decides to sell the house before the loan is fully paid off, it'll transfer with the house to the new owner. Of course, the seller might decide to pay off the loan before selling, or at any other point (I believe this can happen without penalty).

Sounds good doesn't it? It guarantees that savings will be greater than payback of the costs (even with the interest)...

...So, you can't lose! But how does this compare with the current deal?

The Carbon Emissions Reduction Target (CERT) currently contributes towards some energy efficiency improvements, such as loft and cavity wall insulation. This contribution is a grant, not a loan like the Green Deal will be, and is not insignificant.

As an example, let's use a fair-sized three bedroomed semi-detached house. The house has unfilled cavity walls, and is therefore losing over 30% of heat through the three external walls. The true cost of installing insulation here could well be in the region of £600. CERT funding would perhaps provide at least £450 of this cost, leaving just £150 (or less) for the householder to pay. (A number of local authorities then provide special grants through USEA's 'Cocoon Your Home' scheme to 'fix' the cost of insulation for the householder to pay, for example at £49 or £99 etc).

Further, if the householder was in receipt of qualifying means-tested benefits, or over the age of 70, the cavity wall insulation would be installed for free, fully funded (subject to CERT rules). In these scenarios, the deal we have available now is far better than what we'll have from this coming autumn. The same goes for loft insulation...

What we don't have any CERT funding or other grants for is solid-wall insulation. The cost of this work often runs to several thousand pounds. In this case, it might be better to wait for the Green Deal, so that you're provided with the up-front costs assuming it fits the golden rule the payback of the loan comes from energy savings achieved, within a 25 year period.

My advice: if you have uninsulated cavity walls, or your loft insulation isn't as deep as 27 - 30 cm, or even if you're not sure, don't wait for the Green Deal - act now whilst CERT funding still exists. Speak to your energy supplier, or use our insulation comparison service, and Cocoon Your Home... We'll arrange for a free, no obligation survey to firstly check if you need insulation, and secondly if your home is suitable.