Blue chips confirm plan for Green Deal Finance Company
British Gas, EDF, HSBC, Kingfisher and PwC among those to sign memorandum of understanding
A coalition of the UK’s largest energy, banking, construction and law firms has formally confirmed plans to launch a not-for-profit finance company designed to support the government’s flagship Green Deal energy efficiency scheme.
The 16 companies, including British Gas, E.ON, EDF, Goldman Sachs, HSBC, Kingfisher, Linklaters and Scottish and Southern Energy, signed an official memorandum of understanding yesterday committing them to work together to reduce the cost of Green Deal loans to households and businesses.
The group added that it is already working with the Department of Energy and Climate Change, the European Investment Bank and local authorities to finalise plans for the new company.
As first revealed by BusinessGreen the new Green Deal Finance Company is expected to launch next year and act as a ‘national aggregator’ that can bundle Green Deal loans to a level where they can access the capital and bond markets, reducing rates of interest from retail levels of around 10 to 15 per cent to capital market levels of closer to six per cent.
“The success of the Green Deal Finance Company will be a fundamental building block in the overall success of the Green Deal programme,” said Paul Davies, lead partner on yhe Green Deal Finance Company at PwC, the consultancy firm that has helped bring the new consortium together.
“Minimising the cost of finance to future accredited Green Deal providers will create a highly competitive market that will compete on cost, reliability, lifespan and technology.
“It will maximise the measures that can be included within the Green Deal and, for many potential providers, will solve the question of where their finance will come from.”
The news was welcomed by Energy and Climate Change Secretary Chris Huhne, who has faced repeated calls from industry and green groups to deliver measures that will reduce interest rates for Green Deal loans and help make the flagship scheme more attractive to businesses and households.
“This is an exciting initiative with the potential to reduce interest rates on Green Deal finance, while also supporting healthy competition among Green Deal providers including small businesses,” he said.
“New firms like the Green Deal Finance Company are testament to the attractiveness of the Green Deal framework and its potential to offer a better deal to consumers.”
The full list of companies signed up to the memorandum is British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and Scottish and Southern Energy.
There are currently some notable absentees from the list. ScottishPower is not joining the other members of the Big Six energy companies, and only Kingfisher represents the retail sector.
Ministers have said they want retail giants such as Tesco and Marks & Spencer to provide Green Deal services, although some supermarkets have privately signalled that, while they are interested in the scheme, they are unlikely to be in the first wave of service providers.
A spokeswoman for the consortium said that it remained open to interested parties and expects to add more associate members in the coming months, including suppliers, installers, providers, local authorities and industry and consumer representative bodies. “The make up of the group will change over time,” she predicted.
The availability of low interest loans will make it easier for the Green Deal scheme to comply with the government’s ‘golden rule’, which requires that the energy efficiency savings that result from property improvements paid for through the scheme exceed the monthly repayments participants have to make on the loans they take out.
However, Friends of the Earth’s Mike Childs predicted in a Twitter post that, even if Green Deal interest rates stand at six per cent, the scheme could struggle to attract large numbers of takers unless additional incentives are launched.
“Sorry for pouring cold water on Green Deal but 25 yr loan at 6 per cent = 50 per cent money to financiers. Little left for insulation. It needs subsidies,” he said.
A coalition of the UK’s largest energy, banking, construction and law firms has formally confirmed plans to launch a not-for-profit finance company designed to support the government’s flagship Green Deal energy efficiency scheme.
The 16 companies, including British Gas, E.ON, EDF, Goldman Sachs, HSBC, Kingfisher, Linklaters and Scottish and Southern Energy, signed an official memorandum of understanding yesterday committing them to work together to reduce the cost of Green Deal loans to households and businesses.
The group added that it is already working with the Department of Energy and Climate Change, the European Investment Bank and local authorities to finalise plans for the new company.
As first revealed by BusinessGreen the new Green Deal Finance Company is expected to launch next year and act as a ‘national aggregator’ that can bundle Green Deal loans to a level where they can access the capital and bond markets, reducing rates of interest from retail levels of around 10 to 15 per cent to capital market levels of closer to six per cent.
“The success of the Green Deal Finance Company will be a fundamental building block in the overall success of the Green Deal programme,” said Paul Davies, lead partner on yhe Green Deal Finance Company at PwC, the consultancy firm that has helped bring the new consortium together.
“Minimising the cost of finance to future accredited Green Deal providers will create a highly competitive market that will compete on cost, reliability, lifespan and technology.
“It will maximise the measures that can be included within the Green Deal and, for many potential providers, will solve the question of where their finance will come from.”
The news was welcomed by Energy and Climate Change Secretary Chris Huhne, who has faced repeated calls from industry and green groups to deliver measures that will reduce interest rates for Green Deal loans and help make the flagship scheme more attractive to businesses and households.
“This is an exciting initiative with the potential to reduce interest rates on Green Deal finance, while also supporting healthy competition among Green Deal providers including small businesses,” he said.
“New firms like the Green Deal Finance Company are testament to the attractiveness of the Green Deal framework and its potential to offer a better deal to consumers.”
The full list of companies signed up to the memorandum is British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and Scottish and Southern Energy.
There are currently some notable absentees from the list. ScottishPower is not joining the other members of the Big Six energy companies, and only Kingfisher represents the retail sector.
Ministers have said they want retail giants such as Tesco and Marks & Spencer to provide Green Deal services, although some supermarkets have privately signalled that, while they are interested in the scheme, they are unlikely to be in the first wave of service providers.
A spokeswoman for the consortium said that it remained open to interested parties and expects to add more associate members in the coming months, including suppliers, installers, providers, local authorities and industry and consumer representative bodies. “The make up of the group will change over time,” she predicted.
The availability of low interest loans will make it easier for the Green Deal scheme to comply with the government’s ‘golden rule’, which requires that the energy efficiency savings that result from property improvements paid for through the scheme exceed the monthly repayments participants have to make on the loans they take out.
However, Friends of the Earth’s Mike Childs predicted in a Twitter post that, even if Green Deal interest rates stand at six per cent, the scheme could struggle to attract large numbers of takers unless additional incentives are launched.
“Sorry for pouring cold water on Green Deal but 25 yr loan at 6 per cent = 50 per cent money to financiers. Little left for insulation. It needs subsidies,” he said.
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