Why DECC needs solar to save the Green Deal

We're a cynical bunch us Brits. The much-trumpeted Green Deal scheme finally launched at the beginning of the year and, right on cue, the press jumped on its back pulling the scheme apart. Sky-high interest rates, dubious energy saving calculations and a prohibitively expensive assessment fee have all contributed to the unflattering picture painted by the media.

The Department of Energy and Climate Change doesn't help itself either: the Green Deal is incredibly convoluted and complicated – points that tend to raise consumers’ suspicions. Add to that the dubious ‘Green Deal with it’ slogan and a run of adverts that look like the most clichéd of stock images crudely photoshopped together by a group of Year 8 students in an ICT lesson and you have an incredibly bad first impression. 

The public’s concerns are compounded further by the fact that customers have to take out loans through an alien type of financing system where payments are secured to the households and made on electricity bills. The current economic backdrop has made the British public highly suspicious of any financial model and the old adage of ‘if it sounds too good to be true it probably is’ appears to be ringing true with the majority of the public.

As the government’s flagship environmental policy, the coalition can’t afford for the Green Deal to fail. The ‘greenest government ever’ can’t afford to lose face yet again after a litany of failed environmental policies (led by the cuts to the feed-in tariff) has almost fatally damaged green investor confidence in the UK.

The solar industry knows better than most the impact that bad press can have on consumers’ confidence. At the moment the Green Deal scheme appears in somewhat of a free-fall, clouded in confusion.

If uptake of the Green Deal continues to stagnate, what does the government have in its arsenal to breathe new life into it?

Currently, there are nearly 50 eligible technologies under the Green Deal. Solar is one of those. However, in order for a PV installation to be financed by the Green Deal it needs to meet the 'golden rule'; the cost of the work must be less than the expected savings over the length of the Green Deal plan.

Solar doesn’t meet the Golden Rule currently because the cost of installation is too high, but in the near future it probably will and it is at that point that the industry will need to take notice.

At that point, consumers wanting to install solar will be able to finance the cost of installing panels under the Green Deal and still receive the feed-in tariff. However, that moment when solar does become eligible under the Golden Rule could be some time coming.

What would happen if DECC included the feed-in tariff in PV's golden rule calculation? The impact of such a move could be a potential game-changer, and not just for the solar industry, but for the Green Deal too.

Here’s why: According to the latest DECC opinion poll solar is the most popular generation technology in the UK, with more than 80% of the British public keen to see more of it installed. As a result, solar is about the only green technology that can actually drive interest. If DECC is concerned about sluggish uptake of the Green Deal, it knows that it can turn to the PV industry to help kick-start a new wave of interest. Imagine trying to sell a PV system with no upfront cost that will still receive FiT payments – interest in solar, and therefore the Green deal, will skyrocket.

From DECC’s point of view, solar already has a sizeable, trained, mobilised and experienced workforce that would need only the most basic of up-skilling to become fully Green Deal ready.

Including the FiT revenue in the Green Deal’s golden rule calculation would also serve as an important step in consolidating the UK’s environmental policies and bring some synergy between the various schemes. If FiT was allowed to be included under the golden rule it would make sense for the RHI to be included as well.

However, is the inclusion of the FiTs in the golden rule calculations just an industry daydream that’s too good to be true? Apparently not.

At a recent industry event, Trevor Raggatt, Head of Small-Scale & Emerging Renewables at DECC revealed that the department is considering “scenarios” where measures installed under Green Deal finance will also qualify for FiTs or the renewable heat incentive. “We envisage that Green Deal finance will be able to work together as a package and we will announce more detail later in the year,” he said.

Perhaps the marriage of the Green Deal and the FiT scheme is closer than we think. The implications of the partnership could have a profound impact on the success of the Green Deal as well as the whole UK solar industry. We might just be about to witness the whole solar landscape shift.