Just up the road from Bristol, in Stroud, Gloucestershire, they have been piloting the Pay As You Save scheme to provide homeowners with long term loans for installing green technology and energy efficiency improvements.

The pilot must have been considered a success, because the Government has now announced plans to roll out this scheme nationally.

If this does happen (and it’s a big if, with primary legislation needed and a general election in the way first) it could be a real positive step: a serious attempt to solve the problem of funding the massive retrofit UK homes will need in order to achieve lower CO₂ emissions.

However, the way I see it, they’ve made a major blunder in how the scheme has been devised…

Pay As You Save: the good points

There are so many reasons to like this scheme.

First, this is a scheme to improve existing housing stock in a joined-up way, which is badly required. After all, new buildings have strict efficiency codes built in; it’s all our older housing that represents the big environmental challenge. As things stand, we could carry out EPCs and home information packs on every home in Bristol but they will only tick the boxes: there’s no process to take the suggested improvements forward.

Second, the retrofitting proposed under this scheme will take a ‘whole house approach’ to making existing homes more energy efficient. The shortcoming of many energy efficiency schemes is that they take a piecemeal approach (case in point: there’s little benefit upgrading your boiler if you haven’t insulated first).

Third, it’s a serious attempt at solving the problem of how to pay for it. With the average home likely to cost £10-15k to sort out, these whole-house improvements will never happen without some financial help. The scheme proposes that the work will be funded through long term loans attached to the property, repaid through savings on heating and electricity in due course (hence ‘Pay As You Save’).

All in all, this scheme should be highly backable. However, there’s a significant devil in the detail…

Where’s the independent assessment?

Despite extensive consultation and assurances to the contrary, there will be no independent assessment of the homes to be retrofitted. Instead, we’re getting salespeople.

Rather than assessing homes through an independently gathered EPC, the Government appears to have bowed to lobbying from the major energy companies who will send in their own assessors. This pushes DEAs to the sidelines and creates a new, separate role called the Home Energy Advisor (HEA).

The crucial factor is the loss of independent input. HEAs will be employed by the energy companies, who in turn will profit from the work they identify to be carried out. This means HEAs will identify retrofitting as a sales opportunity, which homeowners can then be persuaded to fund through borrowing.

The two winners — and the big irony…

Two big winners here will be the large energy suppliers, who will suddenly have a new profit line to exploit, and the finance houses providing the loans.

And the big irony in this? It presents a way for utility companies to get back a lot of the money that was levied on them to improve energy efficiency in the first place.

For example, under the CERT scheme, utility companies have paid into a fund for energy-efficient home improvements. Under Pay As You Save, since they’re the ones doing the retrofitting, these companies will be given a green light to get this money back at a profit.

What do you think?

I would like to be cheering this scheme on, for all the good reasons listed above.  Pay As you Save could open doors for the extensive retrofitting the UK needs to reduce its fossil fuel dependence.

But overlooking the need for independence in the assessment process was a big mistake. Utility companies will be getting ready to sell green home improvements on finance, at a nice profit. The scheme still offers a chance of a more energy efficient Britain, but instead of being overseen by independents, it’ll be delivered through salesmen.