The Green Deal Finance Company has confirmed details of the financing agreements, signed on March 12 with a major group of stakeholders, the Department of Energy and Climate Change (DECC), and the UK Green Investment Bank.
The agreements provide a £244m funding package for the set-up, financing and administration of Green Deal Plans and enable Green Deal Providers to begin selling Green Deal Plans immediately. The GDFC can also confirm the 16 organisations behind the stakeholder loan – all key players in the Green Deal.
The 16 organisations behind the stakeholder loan are key players in the Green Deal, including energy suppliers, potential Green Deal installers and the Department of Energy and Climate Change. They are British Gas, Carillion, CertiNergy, CIGA, the Department for Energy & Climate Change, Domestic and General Insulation, EDF Energy, E.ON, Gentoo, InstaGroup, Kingfisher, Newcastle City Council, RWE npower, PricewaterhouseCoopers LLP, SSE, and ScottishPower.
The financing package consists of:
· committed funding of £69m from 16 members of the company and other stakeholders in the Green Deal in the form of Stakeholder Loans and Junior Capital
· an additional Junior Capital Facility of £20m and a Contingent Capital Facility of up to £30m provided by DECC
· a senior debt facility of £125m provided by the UK Green Investment Bank
Coupled with a debt facility that The Green Deal Finance Company intends to arrange with the European Investment Bank, this financing package will provide over £300m of finance for at least the first year of expected demand for Green Deal Plans. Further funding from new investors and additional lenders to finance subsequent demand, principally in the debt capital markets, will be sought in the future.
The Green Deal Finance Company provides finance specifically in support of Green Deal Plans for householders and subject to the “Golden Rule” under which Plan repayments must not be greater than the reductions in energy bills which are expected in the first year. By aggregating large numbers of individual Green Deal Plans and establishing a central administration system, The GDFC has been able to raise long-term funding for Green Deal Plans as a long term and low-cost alternative to householders using personal finance.
As a result of the financing package becoming fully unconditional today, The GDFC can confirm that it is offering an initial interest rate for Green Deal Plans of 6.96% per annum. Each Green Deal Plan will also have a set up charge of £63 and an annual operating charge of £20.
Mark Bayley, Chief Executive of the Green Deal Finance Company, said: “We can now offer Green Deal Providers a one-stop-shop to set up, finance and administer Green Deal Plans. This package will provide very long-term and low-cost funding to enable householders across all parts of the country to finance energy efficiency improvements to their homes.
“By ensuring that householders can only borrow what they can expect to save in energy bills, and by offering a fixed rate for 10 to 25 years, Green Deal Plans will be affordable and widely available to over 80% of the population. No other consumer credit product offers a fixed rate for up to 25 years and is this inclusive.”
“I am also delighted to be making this announcement after very strong growth in Green Deal assessments of energy-saving measures requested by householders during March, well in excess of the 1,800 or so assessments carried out in February. Many of these assessments can be expected to convert into Green Deal Plans as householders install the measures into their homes.”
Energy and Climate Change Minister Greg Barker said: “It is clearly very early days but the latest figures on the Green Deal show that this new market is gathering real momentum. The Green Deal gives people the opportunity to improve the efficiency of their homes, make them warmer and protect themselves from rising energy bills.
“The number of businesses getting on board continues to rise steadily, underlining that the Green Deal offers fantastic new commercial opportunities. 48 firms are now authorised as providers, with a further 831 registered to carry out installations and over a thousand individuals registered to offer assessments. Overall this is a really promising start for the Green Deal.”