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'Pay as you save' scheme for eco-upgrades

A new finance scheme to encourage housholders to invest in solar panels or other forms of renewable energy has been proposed by the government. This new Green Finance initiative is part of a broader strategy for Household Energy Management (HEM) called 'Warm Homes, Greener Homes', unveiled in March.

People who use the scheme to pay for an eco upgrade on their homes will repay the loan out of the money they save on energy bills or the income they receive from the new feed-in tariffs for generating their own electricity. Such a scheme is being piloted in certain areas, but it could be 2015 before it becomes widely available.

Loan sold with housesolar technology

A major barrier to such investment at present is the property market: people who install, say, solar panels, can lose much of their investment if they sell the house before the end of the payback period, which could be 10-15 years. Under the proposed scheme, the finance will attach to the property, not the owner, and both the loan and the benefits would be sold on with the house.

Ambitious carbon cuts

The broader ambitions of the HEM strategy are that every home will have loft and cavity wall insulation by 2015, and several million households will get a thorough 'eco upgrade', including measures such as heat pumps, solar panels, and solid wall insulation. Also, every home in Britain will be fitted with a smart electricity meter by 2020. The target is to reduce carbon emissions from homes by nearly 30% by 2020.

Much of the overall strategy will be funded by the energy companies. They will be obliged to meet carbon-saving targets or face stiff financial penalties, rather like the current CERT (carbon emission reduction target) scheme, which expires in 2012. There will also be greater emphasis on improving rented housing, with a new Warm Homes standard, promotion of district heating schemes, and an overhaul of the energy advice services.