It is estimated that 45% of the UK’s emissions come from existing buildings, so these need to be considerably upgraded if the target of an 80% reduction in emissions by 2050 (as set out in the Climate Change Act) is to be met [1]. The government has expressed that emissions from our homes should be “approaching zero” by 2050, therefore new schemes need to be implemented to aid this upgrade. Pay As You Save (PAYS) is considered an innovative finance solution that allows household to invest in energy efficiency measures and microgeneration technologies with no upfront costs [2]. This thereby reduces harmful emissions and saves money on energy bills, so it is well worth considering.
The Aims of PAYS
The scheme is not set to be implemented fully until 2012, however the Department of Energy and Climate Change (DECC) has set up a pilot scheme in conjunction with the Energy Saving Trust with £2m available in both 2009/2010 and 2010/2011. This pilot is set to trial and assess the PAYS concept – that householders will make repayments spread over a such a time that they lower than their energy bills, so carbon and financial savings are made straight from the beginning. The objectives of the pilot schemes are to:
- Test consumer interest in elements of PAYS finance packages – such as the relationship between repayments and savings.
- Test whether consumers would prefer to make repayments through energy providers or the council.
- Examine how to market and communicate the finance packages.
- Test the levels of subsidy required to overcome the high capital costs for expensive energy efficiency measures and microgeneration technologies.
- Test the viability of difference finance models.
How To Take Part
The pilot scheme is currently being implemented in around 500 homes from Birmingham, London Borough of Sutton, Sunderland, Stroud, Surrey and Sussex. These are being run by five different partners:
- Gentoo Group Ltd. – Over the next 15 months, Gentoo will identify around 100 properties made up of void and occupied housing in the Sunderland area which will be upgraded to include energy efficiency measures and microgeneration measures [3].
- British Gas – British Gas will be promoting microgeneration technologies to home owners in the Sussex and Surrey area. Homes will receive a home energy audit , and where necessary, a technical survey for any recommended measures such as Solar Hot Water. A detailed report and costing will be provided and at that point the home owner may take advantage of those measures using the PAYS scheme [4].
- Birmingham City Council - As part of the Birmingham Energy Savers (BES) initiative, there is a £35 million project to deliver energy efficient retrofitting of 4500 homes and small businesses over the next three years by offering a variety of funding packages. To be eligible, you must live within the Birmingham Council area, reside within the home, have recently (or propose to) carry out basic energy efficiency measures and agree to management and supervision of works carried out by the City’s Homeworks Service[5].
- B&Q UK – This is a trial in partnership with the London Borough of Sutton and sustainability experts BioRegional. The scheme will allow 100 homeowners to have energy efficient measures installed by B&Q at their property. The funding will include a 40% free subsidy and a 60% interest free loan that will be repayable over 10 or 25 years. The typical investment will be in the region of between £8000 and £12000 [6].
- Stroud District Council – This is part of Stroud District Council’s programme of carbon reductions called Target 2050. 50 homes will receive a tailor-made home energy survey and report identifying measures that would be required to achieve deep carbon cuts, with estimates of energy, carbon emissions and fuel bill savings. Further advice will be given in relation to making improvements and installers and sources of finance will be recommended. The council will manage the repayment process [7].
What You Could Save
Installing a solar hot water system on the roof of a three-bedroom semi detached house would cost you around £4200, however you would expect to get over £500 a year from savings on your energy bill and income from the renewable heat initiative. Choosing a Pay As You Save loan over 25 years would require you to repay around £330 a year, therefore you would gain £170 a year.
[1]UK Green Building Council (2009) Pay As You Save: Financing Low Energy Refurbishment in Housing
[2]http://www.energysavingtrust.org.uk/Home-improvements-and-products/Pay-As-You-Save-Pilots
[8]http://www.guardian.co.uk/environment/2010/mar/02/pay-as-you-save-loans-decc-answers
