Green Deal didn't deliver energy savings, says NAO

A damning report from the National Audit Office has slammed the government’s failed Green Deal initiative.

The report said the scheme was poor value for money and failed to deliver carbon emission savings.

It said this was because the design and implementation of the scheme by Department for Energy and Climate Change (DECC) did not persuade householders that energy efficiency measures were worth paying for.

According to the report, £240m of taxpayer money was spent on the scheme.

The report did add that DECC had achieved its target to improve the energy efficiency of one million homes, but said this came “almost entirely” through the energy company obligation (ECO).

It added DECC’s design of ECO to support the Green Deal meant it cost more for energy companies to meet their obligations, reducing the scheme’s value for money.

In addition, an accompanying investigation from the National Audit Office (NAO) into Green Deal financing revealed that DECC doesn’t expect to recover the £25m loan it gave to the Green Deal Finance Company nor the extra £6m in interest.

The investigation said DECC based its loan on forecasts of “significant consumer demand” for Green Deal loans but found that demand for Green Deal finance was lower than forecast from the outset, meaning the finance company could not cover its operating costs.

It added that DECC agreed a second loan with the company worth up to £34m in October 2014, of which the finance company has drawn down £23.5m.

According to the NAO, DECC still expects to recover this loan in full as it will be repaid before other investors in the finance company.

Head of the NAO, Amyas Morse, said DECC’s “ambitious aim to encourage households to pay for measures looked good on paper”.

But he added that “in practice, its Green Deal design not only failed to deliver any meaningful benefit, it increased suppliers’ costs – and therefore energy bills – in meeting their obligations through the ECO scheme”.