Written by Simon Peat, CEO of Project Solar
With energy bills rising again by 5% this month as the price cap increases, energy costs are undoubtedly going to crop up in many conversations with clients.
Some clients may even be seeking advice on how to manage their finances in this area. They may want to explore the merit of investing in green home improvements as a long-term financial strategy, or discuss how best to fund that investment in the short-term.
Appetite in renewables investment is on the rise among homeowners. A recent survey from Project Solar conducted with the British public found that 7% of respondents have already taken the decision to install solar panels as a means of reducing energy bills in the winter months.
While energy efficiency measures might not be the traditional remit of financial advisers, it’s an area they’re increasingly going to have to get comfortable with if they’re not already.
Not least because the world of green mortgages, which can reward borrowers for carrying out ‘green’ home improvements, is expanding rapidly. So, for advisers who do arrange mortgages, it’s more important than ever that they familiarise themselves with different ways of adding value to property assets to give them more scope to get their clients a better deal.
Awareness of green mortgages has dropped among consumers, so there’s a clear opportunity for advisers to educate clients and add value. Research released this month from the Mortgage Advice Bureau revealed that almost two thirds of advisers (65%) said their clients had never heard of green mortgages.
The same survey also showed that over half (52%) of advisers say it’s challenging to broach green mortgage benefits and educate clients on things like Energy Performance Certificate ratings against the backdrop of the cost-of-living crisis. This would perhaps be easier if advisers were armed with better knowledge of what type of products clients could install, with real savings examples and pay-back terms – essentially giving a bit more substance to their conversations.
Even something as simple as a table that advisers could share with clients to help them digest information would be a good place to start. This could map out types of green home improvements – everything from solar panels to heat pumps to cavity wall insulation – the installation cost, the average added-value to the property, average annual energy bill savings, and whether there’s an opportunity to earn money from selling excess energy back to the grid. Impartial organisations like Energy Saving Trust can be a good place to draw that information from.
As an example, the Energy Saving Trust estimates that a typical household with a 3.5 kilowatt-peak solar energy system can knock between £160 and £420 a year off bills at the current Energy Price Cap rates – though of course, how much money homeowners save will depend on the size of their system and the rate at which they consume energy.
And, providing the system meets eligibility requirements, homeowners can make money by exporting the renewable electricity they haven’t used under the Government’s Smart Export Guarantee. According to the Energy Saving Trust, a typical household could make between £80 to £110 each year doing this.
We all know that upfront cost is often the biggest barrier to any energy efficiency upgrade, and so the question of how to fund this may also be something clients need advice on. Gone are the days, for example, when the majority of customers would typically use their savings to invest in solar panels. It means that advisers need to have a close eye on what funding options are available.
In the solar panel space, there are a raft of government grants for homes available in 2024 – though advisers will need to familiarise themselves with eligibility criteria for each. And there are new initiatives being touted regularly for renewables retrofitting, such as the proposed ‘rebate to renovate’ scheme, which the government is currently being urged to consider, and which would introduce a stamp duty rebate to incentivise homeowners to retrofit their properties.
In addition to available government grants, many providers also have their own credit options. Some solar panel installers, including Project Solar, can offer customers competitive finance options to help facilitate the initial purchase – making it possible for more people to invest in renewable energy products that otherwise would not have the means. Of course, it’s impossible for advisers to be familiar with every single private credit offer, but what they should be telling clients to do is go with a provider that is FCA regulated.
Finally, when the Consumer Duty came into effect last year, it was with one clear goal: to deliver good outcomes for customers. While of course this absolutely does not mean encouraging clients to invest in renewables, being able to talk knowledgeably about green home improvements and the corresponding investment/benefits – if it could be an appropriate avenue for the client – does enable advisers to deliver that more holistic service to clients. Not only is this in the spirit of what the Duty intends, but it is also likely to drive continued client loyalty too at a time when energy costs are a top financial concern for many.
