With the price of gas and electric likely to rise over the long term, energy is quickly becoming an unaffordable luxury for many. However, due to poor insulation in many houses and buildings it's possible for the average household to save hundreds of pounds a year just by investing a little in improvements, and tightening up efficiency.
Energy Company Obligation (ECO)
The ECO falls within the government's programme to legislate energy providers in reducing CO2 levels. It can help save you money by obligating suppliers to deliver energy efficient measure to domestic properties in Britain.
Funding is generally for those on benefits and credits, contact your energy supplier or the Energy Saving Trust to find out if you qualify. If you do, funding is available for relatively expensive energy measures such as wall insulation and boiler replacement.
The Warm Front & Green Deal Scheme
Currently there seems to be no government funding in terms of improvement grants. The 'Warm Front' scheme ended in January 2013 and was replaced with the 'Green Deal', which was subsequently axed in July 2015.
The green deal was effectively a loan which was repaid through the money saved on your energy bills.
With it being a loan, you would have ended up paying interest on it, and as such it was actually possible for some people to get lower borrowing rates from elsewhere. The great thing about the scheme was it's convenience, and that it was structured so that your repayments couldn't exceed the amount of money you were saving each month; meaning your bills wouldn't rise at all during repayment, and would drop dramatically once the loan was repaid.
If you're in a position to borrow or invest existing funds, it will be worth looking into ways in which you can improve the energy efficiency of your home, as you can recoup much more back in savings on your bills. You'll be surprised how much you can save just by installing some cheap measures such as boiler jackets and loft insulation, and as these measures are cheap they have a short payback time – often a within a year. If you have more to invest to can decrease your bills even more dramatically by installing wall insulation, replacing your boiler, and even generating your own electricity at home! Here are some options you might be in a position to consider:
- Savings: Obviously you won't pay any interest, but you also won't accrue any. This is probably the best option as long as you don't foresee any future financial difficulties such as redundancy. You can replenish your savings by setting up a direct debit for the saved amount to a spare bank account until the debt it repaid.
- Unsecured loan: you may get a better rate than the Green Deal would have offered anyway. It's a safe bet if you can get a reasonable rate, and offers a good option if you don't already have funding available. Some people may not be able to secure credit, and those who do might end up paying more back each month than they are saving on the bills; thus leaving them a little out of pocket until the loan is cleared.
- Re-mortgage: Better rates than unsecured loans, but you have to be a home owner; i.e. no good for tenants.
- Credit card: depending on the cost of the improvements, you may consider getting a 0% interest credit card. With this you could get an interest-free loan providing that you can clear off the debt within the 12-18 month interest-free period