By Marco Marijewycz, E.ON
Around 19 million UK households – equal to around 71% of the UK’s 27 million homes – currently fall below an Energy Performance Certificate (EPC) Band C rating, which means they are missing out on energy savings of up to £380 a year by not having basic measures in place.
Tackling energy efficiency levels of existing housing stock is one of the biggest infrastructure challenges of this generation and is part of the Government’s Clean Growth Strategy which aims by 2035 to bring as many homes as possible up to EPC Band C level where practical, cost-effective and affordable.
Under the umbrella of the Energy Efficient Mortgage Initiative, E.ON is working with BNP Paribas Personal Finance to develop and pilot an innovative Energy Efficient Mortgage product, which will allow movers, first time buyers, and re-mortgagers to use their mortgage to borrow further via a linked ‘energy efficiency home improvement loan’ to improve the energy efficiency of their homes. Under this model BNP Paribas Personal Finance would provide the improvement loan financing and E.ON would provide a managed service to install appropriate energy efficiency solutions. This service would help the customer to identify what measures would deliver the greatest savings potential, E.ON would then install the measures and offer a range of in-life energy services.
The improvements funded through the scheme loan could also result in a discounted mortgage rate once the energy efficiency measures have been verified via an updated EPC.
Michael Lewis, Chief Executive, E.ON UK, said: “We need to find ways to radically increase interest and action on energy efficiency in homes, but property owners often face a significant financing barrier when wishing to do so. In the UK, attempts have been made in the past to tackle this barrier through schemes like the Green Deal, but they have not been successful, in part because they weren’t designed with the customer front and centre.
Energy efficient mortgages have the potential to be a game changer in the delivery of affordable finance and we are ready to meet the challenge for home-owners motivated to take the step into energy efficient living. Our agreement with BNP Paribas Personal Finance is a further step along this journey and brings together two well-known international companies with expertise in financing and delivering energy saving solutions across Europe.”
Easier access to affordable financing via an energy efficient mortgage should provide an added incentive for customers to better insulate buildings, replace old heating systems or increase their energy independence through solar panels, batteries or virtual storage. It can also ease the purchase of existing energy-efficient houses or commercial buildings through preferential financing in conjunction with a mortgage.
The ambition of this Energy Efficient Mortgage pilot is to provide a competitively priced home improvement loan provided by BNP Paribas Personal Finance linked to a mortgage to fund a range of personalised energy efficiency solution bundles delivered by E.ON. These could include measures such as insulation, energy efficient boilers and smart meters and smart thermostats. For customers wishing to prepare their home for tomorrow’s energy world, smart energy technologies such as electric vehicle charging points, solar panels and battery storage could also be funded as part of the Energy Efficient Mortgage pilot, as well as heat pumps. All of which E.ON intends to steer by its innovative Home Energy Management System Dashboard.
E.ON and BNP Paribas Personal Finance are working towards further collaborations with building societies and High Street finance providers to pilot and develop this innovative new financing solution to customers, initially for the UK market, in the first half of 2019. This collaboration aligns closely to the recommendations of the UK Government’s Green Finance Task Force.
The partnership follows consumer research undertaken by E.ON as part of the EeMAP project in several European countries in February 2018 to understand if customers would take advantage of an energy efficient mortgage where E.ON found a positive consumer appeal towards the concept, particularly in Great Britain. The research conducted by E.ON in several European countries looked into the question of whether customers would even take advantage of a standardized “energy efficient mortgage”. The result is consistently positive with the overall high level of appeal towards the concept particularly high in Italy and Great Britain. In Germany and Sweden, respondents welcomed the fact that, in addition to existing funding instruments, there was an alternative or more extensive offer.