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Is the Green Deal door shut to SMEs?

March 13, 2014

Even if the Green Deal overcomes its slow start, the market is dominated by major retailers, contractors and energy companies – how can SMEs access opportunities?

A slow start for the Green Deal…

The government’s Green Deal promised much in the way of new opportunities for UK companies, but take-up has been extremely sluggish. By the end of July 2013:

  • 58,124 Green Deal assessments had been lodged but . . .
  • only 419 Green Deal finance plans for individual properties were in the system – 286 ‘new’ Green Deal plans, just 132 having signed on the dotted line as ‘pending’, and a paltry one ‘live’.
  • 7,461 cashback vouchers had been issued – of these, 4,256 had been paid (following installation of measures) with a value of £1,162,386. Virtually all were for boiler replacements.
  • Just 79 Green Deal Providers had been authorised.

‘It is obviously disappointing that more Green Deal assessments have not been turned into finance plans, and it shows just how crucial additional incentives are to drive take-up. But we simply cannot let this fail – retrofitting the UK’s housing stock is too important for reducing energy bills, improving health, creating jobs in the construction sector . . .’

Paul King, Chief Executive of UK-Green Building council

An urge to action

In June 2013, an open letter orchestrated by the UK Green Building Council, a cross-section of chief executives from housing, energy, finance and construction companies urged the three main UK political parties to collaborate to address ‘major concerns’. It outlined a number of barriers to the uptake of Green Deal energy efficiency measures such as:

  • The lack of long-term structural incentives.
  • The interest rate for Green Deal finance, which has been described as ‘sky-high’ – currently 6.96% but rising to around 7.96% once all administrative costs are included for a loan of 10 years
  • The complexity of the scheme, undermining stakeholder involvement and collaboration.

The same month, two of the UK’s largest housing associations – Places for People and Affinity Sutton – also criticized the flagship policy, claiming it had been hijacked by red tape, making it costly and financially unviable for social landlords.

A boost from the government

Responding to the backlash, the government is now looking at fresh ways to boost demand, including:

1) a Green Deal Communities scheme in which local authorities can bid for a share of £20 million of funding from the Department of Energy and Climate Change (DECC) to drive street-by-street delivery of the Green Deal

‘If we are going to deliver the Green Deal at real scale then we need a ‘street-by-street’ vision and a ‘street-by-street’ plan! It starts here!’

Energy and Climate Change Minister Greg Barker

2) the establishment of a Green Deal Provider Forum, chaired by Ian Cheshire, Group CEO Kingfisher Plc, including senior representatives from the Green Deal Provider community and broader retrofit industry, to look at ways of supporting and enhancing the Green Deal and the energy efficiency retrofit sector.

Is the Green Deal a fair deal for SMEs?

But even if the Green Deal eventually does take off, many SMEs will be concerned about their chances of winning new business in a market already dominated by major retailers, contractors and energy companies.

The problem . . .

  • The way the Green Deal is organised, provider companies have to be able to provide a wide and complex set of services to customers, which is difficult for smaller firms to achieve.
  • Larger companies might mobilise to access existing areas of SME work using Green Deal finance as a crutch.

The solution . . .

  • SMEs should collaborate to net their share.

So how can the smaller fish team up to protect themselves from the bigger fish?

A new way of thinking for SMEs

1) Contact selected Green Deal Providers (GDPs) direct and ask how to get on their supplier list.

2) Join a reputable group that represents small contractors who, having found potential Green Deal work (SMEs should not forget the non-domestic market), can arrange for GDP involvement.

3) Join a trade association that brokers member contact with GDPs. For more ideas how SMEs can tap into Green Deal opportunities take a look at:

An example of opportunity knocking

The Green Deal Conduit is:

  • A new construction cooperative run by its SME members.
  • Set up and project managed by consultant Parity Projects.
  • Backed by eight industry membership organisations covering around 100,000 small firms, including the Federation of Master Builders, National Federation of Builders, RIBA and RICS.

It is designed to supply a provide a route to customers for small businesses which lack the marketing clout of major providers. It will work by seeing SMEs in a given area team up with a Green Deal finance provider to offer Green Deal services to their existing customers. So SMEs carrying out work such as refitting a boiler or doing a loft conversion, can then carry out Green Deal work at the same time.

You are not alone. SMEs can open that Green Deal door via collaborative working!

Need some tips on working collaboratively? See our eGuide: Smash the silos – six tips to make your teams get along

Smash the Silos: 6 Tips for Better Interdepartmental Working

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