Acquisition gives Green Deal a new lease of life

Greenstone Finance and Aurium Capital Markets (Aurium) have announced the acquisition of the business and assets of the Green Deal Finance Company (GDFC), as well as its existing loan book with a principal value in excess of £40m.

Greenstone Finance, which invests in organisations focused on financing in renewable energy and energy efficiency, and Aurium, a structured finance boutique with a focus on renewable energy, have acquired GDFC Services and its subsidiaries with immediate effect; the new ownership will reportedly continue to service the existing Green Deal loans and will commence financing of new Green Deal loans in Q1, 2017.

First launched by the Government in 2013, the Green Deal was established to address the fact that the UK has some of the most thermally inefficient housing in Europe. The idea is that Green Deal loans provide customers with accessible financing to improve their homes by installing energy efficiency products. It is said that in particular, Green Deal financing has the potential to help:

  • Those who face the heavy costs of needing to install a new boiler or other essential measures such as insulation but who can’t afford to pay the upfront costs of doing so
  • Those who want to increase the value of their homes through installing renewable energy or energy efficiency measures
  • Landlords requested by tenants to install energy efficiency improvements or, as of April 2018, landlords who own properties that fall below the new minimum energy efficiency (EPC) rating of E.

Green Deal loans should not only offer competitive interest rates, but are said to be more easily managed as loans are repaid as part of a customer’s energy bill, which will normally be reduced by the energy savings generated from the measure the loan has financed – a “Pay-As-You-Save” scheme.

Another positive point was said to be the fact that the loan remains with the property and is paid by the energy bill payer from time to time – ensuring the payments are made by the person who benefits from the energy saving. Although this did raise the question as to whether a potential buyer might be put off purchasing a property with a Green Deal loan attached to it.

Despite the best intentions of the Green Deal and ministers at the time of its launch hailing it as the biggest home improvement measure since the second world war, the scheme was heavily criticised and suffered from very low take-up from the public due to poor marketing, a complicated set-up and homeowners being put off by loan interest rates. Ultimately the Government pulled the plug on funding for the scheme in 2015 citing low take-up and it can only be hoped that mistakes have been learned for this new round of funding.

Neil Marshall, chief executive of the National Insulation Association, said: “The NIA and its members see this as a positive development. It will provide a further option for consumers to finance the purchase of insulation measures to reduce their bills. It is vital that they learn the lessons from the previous Green Deal scheme in order to make the offer as simple and attractive as possible for householders and businesses. We are looking forward to working with the new management team at the Green Deal Finance Company to contribute to this.”