U.K. Green Deal on Shaky Ground After First Nine Months

On October 8, a cross-party committee of British MPs released a status update report on U.K.'s Green Deal program. The program, which started in January 2013, aims at improving residential energy efficiency by providing subsidized financing and energy audit support. The report states that only 384 households have signed up for energy efficiency improvements so far out of the 71,000 that received energy audits.

When the Green Deal program was announced in 2012, the insulation industry had great hopes of it being a major market maker for wall cavity, attic, and roof insulation given Britain's large stock of old, poorly insulated buildings. However, we had pointed out several potential pitfalls in the scheme (client registration required), such as shifting the onus from utilities to consumers for energy efficiency retrofits, lack of a residential building energy efficiency code, and possibility of higher financing rates for leased properties vs. owner occupied properties. We had advised the insulation industry to take a cautious approach to the U.K. market. Unfortunately, our worst fears have come true in the October 2013 report.

What the Green Deal failure illustrates is that big national-level announcements for energy efficiency and subsidized financing mean little, unless accompanied by building code and utility regulations. A great example of a country that has taken all these steps is Germany, where the combination of EnEV national building energy efficiency code, KfW bank financing, and high electricity prices have converged to catalyze the market. As a result, adoption of established insulation technologies such as fiberglass and foam board is a foregone conclusion, and even advanced technologies like Vacuum Insulation Panels (VIPs) are feasible in pre-fabricated homes. Insulation companies should keep these successes and failures in mind, as they allocate precious marketing resources to these countries.