When I first heard about the Green Deal, I thought – yay! Finally, someone had realised that the way to get Joe Householder to energy-efficiency-improve his house was to give him an incentive, and easy access to capital. Student loan style finance (pay it back if you fancy it) provided against future energy savings stretching into the distance would put loft insulation in every house in the country.
Sadly, the reality seems far from this. “A simple idea made very, very complicated”, said one sage of the present version of the Green Deal, which proposes to allow householders to insulate their home, add a new bolier, or put a PV array on their roof, by borrowing the money to do against money saved off energy bills over a decade or so.And compliated it is. Check it out. It looks like a future mis-selling class-action nightmare to me.But the Marketing Thing is, why will people bother? Other than some general tree-hugging warm-feeling stuff, there seems little reason to take advantage of it.
Let’s do the math. Your energy bills are around £800 a year. After five grand of improvements, they (are predicted to) fall to around £450. Yes, quids in!
But wait, you’ve got to pay back that loan. So that gets added to your energy bills (according to the latest numbers I’ve seen) at around £320 a year for a ten-year stretch. So you save a grand total of, er, thirty quid a year on your energy bill.
So you go through a month of builders knocking your house about, making a mess, and filling your loo with noxious gases while you supply them with endless tea for a return of £300 over the next ten years. You’ll probably have spent the first couple of years’ savings on PG Tips and semi-skimmed before you get going.
No, no, no. No-one sane is going to go through all that for £30 a year and a good feeling about their carbon footprint. Especially since they’ll probably move on from that house inside the ten years and never experience the long term saving.
Now I’m not knocking the builders – it’d be good work. They’d get paid. And to be frank if I had to be round at someone else’s house by 8am so they could do the school run I’d probably need ten minutes quiet reflection in the smallest room too.
I’m not knocking the people behind the scheme either. Well, OK, I am. But their heart is in the right place. Sadly, that’s not enough. We need to apply marketing principles here.
Q: What need or want are we satisfying?
A: the need to feel good about having made a significant reduction to one dwelling’s carbon footprint which, if repeated 200,000 times a year over the next ten years will help meet UK Plc’s commitment to the Kyoto protocol. Etc.
B: the need to spend half as much as I do now on energy, but still live in a warm, draught-free house, so I can sit around in my sluggies of an evening, and afford more beer and crisps.
In order to be a proper marketing person, you need to anticipate and satisfy customer needs or wants profitably, and to make that work at scale the needs & wants need to be shared by a mass of customers. Answer A is only a need or want for nutters. Answer B is one shared by 99% of the UK population that is unfortunately not satisfied by the Green Deal. QED – the Green Deal will fail.
This scheme is not going to work unless it halves homeowner’s energy bills, and that means spreading the repayments over a much longer period, at a lower level of interest (government backed interest free loans, as in France), or someone putting up the money for the improvements.
Either way, Mr Huhne, if you’re serious about meeting the carbon commitments, get your wallet out.