E.ON and BNP Paribas Personal Finance UK have announced a new collaboration to bring innovative Green Mortgages one step closer to the UK property market, providing a new and affordable source of finance to make energy efficiency makeovers more accessible to millions of people around the country.
Around 19 million UK households1 – 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 Action Plan (EeMAP) initiative, E.ON is working with BNP Paribas Personal Finance to develop and pilot an innovative Green 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.
“Green 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 Green 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 Green Mortgage pilot, as well as heat pumps. All of which E.ON intends to steer by its innovative Home Energy Management System Dashboard.
Stephen Hunt, CEO, BNP Paribas Personal Finance, said:
“BNP Paribas Personal Finance is pleased to work with E.ON in exploring how helpful finance solutions can be developed to drive positive change within the energy efficiency sector. This collaboration will look to assess how an attractive consumer offer can be created for the UK marketplace and we continue to look at bringing new, innovative propositions to the market. As a pioneer in positive banking we are proud to play an active role in both driving forward new sustainable business opportunities and helping the local communities in which we work throughout the UK.”
Claire Perry, Minister for Energy and Clean Growth, said:
“The UK has led the world in cutting emissions whilst growing our economy – with clean growth driving incredible innovation and creating hundreds of thousands of high quality jobs. Ten years on from the Climate Change Act, the first ever Green GB week is a time to build on our successes and explain the huge opportunities for business and young people of a cleaner economy. I’m delighted to see how many more businesses and organisations such as E.ON and BNP Paribas Personal Finance are seizing this multi-billion pound opportunity to energise their communities to tackle the very serious threat of climate change.”
Luca Bertalot, Secretary General, EMF-ECBC, said:
“As EeMAP Coordinator, the EMF-ECBC is delighted to see that the Initiative has triggered real cooperation among market players which will provide consumers with a concrete incentive to improve the quality of their homes by way of an energy efficient mortgage. This latest development shows how the Initiative is a win-win for consumers and market players and we hope that this will be the first of many strategic partnerships in this area.”
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 Government’s Green Finance Task Force.
The partnership follows research undertaken by E.ON 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(2).