The UK’s “Green Deal”

Why is it so hard for new energy and efficiency technologies to penetrate the domestic home market?  Solar panels are perhaps the best example of an easy-to-use, cheap, and effective technology that has not achieved critical mass despite its obvious advantages.  This is a complex discussion but many studies point to a simple answer: Upfront Costs. A recurring discussion on this blog and in class has centered on the impact of upfront costs on adoption of new energy technologies and many government programs emphasize subsidies to achieve adoption goals.

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 In the UK, the government is putting its efforts behind an ambitious, all-inclusive plan called “The Green Deal” . The program is designed to eliminate confusion by offering consumers a single unified package that doesn’t require additional research or personal investment. This plan will offer incentives to private industry to install smart meters, insulation, and even solar panels at no upfront cost to the consumer.  The cost of the improvements will then be recouped via a small monthly charge on a utility bill.  The plan is also guided by a “golden rule” that the cost of the improvements should never be more than the potential energy savings, which must be demonstrated through an audit. For the full details, see here: Green Deal Summary 

While the political push behind the Green Deal is glowing, there are concerns about the amount of efficiency gains and construction firms have questioned the economics behind the plan.  While subsidies for renewable energy is nothing new, it’s intriguing to see governments taking an extremely hands on approach that, in some ways, excludes the end consumer from many of the crucial decisions.  It will be interesting to see if this “Green Deal” can help the UK meet its ambitious goals of reducing CO2 emissions or if consumer backlash over private industry handling of home upgrades will prove to be too much.

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