To payback or not to payback?

The Green Deal relies significantly upon participants feeling that they can cover the cost of the energy improvement measures through the energy saved.

However in many cases this reliance may lead to disappointment.

I am a landlord and recently replaced the 1950's windows in a London terraced house with modern uPVC sash windows. I did not do this through the Green Deal but did take out a personal loan for part of the payment at 5.75% APR (less than the Green Deal loan rate).

I obtained several quotes and paid £10,000 'all-inc with VAT' to replace 17m2 of windows; a rate of £590 per m2. There are real benefits. The windows were old, hard to maintain, suffered from bad condensation and rot. They were large, draughty and cold in winter, even with thick curtains.

Importantly as a landlord, the old windows could not be opened in a fire preventing escape. The new ones have modern features, including tilt 'n' turn and sliding sash which is  much safer as they can be cleaned from the inside and someone could get out in a fire.

So what about the energy saving? Well a rough estimation suggests that the tenants may save £51 per year off their gas bill; a payback in excess of 100 years. On the face of it, I would need a significant subsidy and a higher gas price to make this calculation work. And even here there is an issue. In one important respect the government does not help consumers. Energy measures attract a 20% VAT rate whilst the energy itself is charged at 5% VAT. The problem here should be obvious and is one that would be in the gift of government to address.

Your thoughts are important. What are your views?

What examples do you have?
How important is the financial payback to you in comparison to other benefits, such as improved comfort or safety?



Note: energy saving example is assessed as:

W/K (air and fabric loss) x Heating Degree Days x gas input rate (p/kWh inc VAT) x heating control factor (no. of hours boiler is assumed to operate) x 1/10,000 (scale factor) = £ Saving each year

66 W/K x 2000 K/Days x 4p/kWh x 24 hours x 40% (heating control factor) x 1/10,000 (scale factor) = £51 saving each year