DESNZ: Green Deal Reduction Calculator
An algorithmic tool for calculating the amount to reduce a Green Deal loan by when a consumer complaint is upheld.
Tier 1 Information
1 - Name
Green Deal reduction calculator
2 - Description
The DESNZ Secretary of State has a role defined in legislation to make the final decision on sanctions and redress for Green Deal complaints made by consumers, in some circumstances. One of the sanctions DESNZ can choose is to reduce the value of the loan by an amount designed to fairly compensate the consumer. A reduction calculator is used to do this in a balanced attempt to both accurately compensate consumers for their losses, whilst also attempting to standardise the process and making it balanced and fair to all consumers seeking redress.
3 - Website URL
N/A
4 - Contact email
gdconsumers@energysecurity.gov.uk
Tier 2 - Owner and Responsibility
1.1 - Organisation or department
Department of Energy Security and Net Zero
1.2 - Team
Green Deal team
1.3 - Senior responsible owner
Deputy Director - Green Home Finance
1.4 - External supplier involvement
No
1.4.1 - External supplier
N/A
1.4.2 - Companies House Number
N/A
1.4.3 - External supplier role
N/A
1.4.4 - Procurement procedure type
N/A
1.4.5 - Data access terms
N/A
Tier 2 - Description and Rationale
2.1 - Detailed description
The Reduction calculator takes data on Green Deal loans sourced from Green Deal Finance Company (GDFC Assets Limited, who hold the rights to receive repayments on the vast majority of Green Deal loans). This data includes the identity of the current bill payer at the Green Deal property, the original Green Deal provider who sold the loan, the interest rate of the loan, full address, start date and live date of the loan, duration of the loan, size of any advance payments, size of any additional charges, lists the installations made under the Green Deal loan, and whether there has been any previous reductions to the loan. To this data the Green Deal team then adds the effective date (the date the initial eligible complaint was made) and the date the sanction will be implemented. For cases of mis-selling, with this data, the reduction calculator compares the daily rate of payment for the consumer, to a ‘new’ daily rate of payment. This new daily rate is equal to the assumed average savings per day resulting from all installations that have taken place under the Green Deal loan. These average savings are taken from the National Household Model for all types of installation aside from Solar Panels, where we use estimated figures from the Energy Savings Trust. This new daily rate is applied from the effective date of the complaint, which may be some years before the date we are applying the sanction, but is not applied to payments made before the effective date (when the consumer first made an eligible complaint). This reduces the value of the loan to a new amount from the effective date forwards, and allows a total percentage of the entire loan that has been reduced to be calculated. If this total percentage is below 30%, the new daily rate is boosted to bring the reduction to a minimum of 30%. The new daily rate is then the consumer’s new charge paid going forwards, and the excess paid by the consumer since their effective date is refunded to the consumer. For complaints of installation quality, the value of the reduction is instead the quoted repair cost added to the calculated theoretical cost of replacing the consumer’s insurance backed guarantee for the remaining time it would have been valid had it been properly provided by the Green Deal provider.
2.2 - Scope
The tool is only used when the Green Deal team have already decided to propose that reducing the value of the loan is the correct level of sanction. The tool is not used when a loan is cancelled, or no sanction is proposed, the tool is not used at all.
2.3 - Benefit
The reduction calculator allows a standardised approach to applying reductions to Green Deal loans, which is fair to both consumers and GDFC Assets. It is flexible to the individual circumstances of consumers, awarding greater levels of reduction where consumers payments are drastically higher than the savings they can expect to receive or where their repair costs are higher. The minimum 30% reduction also means that consumers cannot be given extremely low reductions where we have found some level of mis-selling to have taken place. The array of variables for each case mean the calculations involved are complex, so the calculator tool allows us to determine the level of loan reduction in a way that isn’t overly time intensive.
2.4 - Previous process
On our first reduction case, we did develop a more rudimentary excel calculation that aimed to calculate a reduction for that case in a similar fashion. The factors taken into account were similar, but once we received a greater number of cases we recognised the need to create a more standardised calculator for ease of use.
2.5 - Alternatives considered
The calculator was created as a way of determining reductions that was able to take into account an array of variables for each case, but not to the extent that it would be unreasonably labour intensive. Alternatives could have been to update the savings estimates for each measure on a more regular basis, do more to take lost Feed-in Tariff (FIT) earnings into account, or the characteristics of individual homes. However, the Department deemed this would be unreasonable given the number of cases required to work through, and this position has been consistently supported in decisions issued by the First Tier Tribunal on appeals against our decisions.
Tier 2 - Decision making Process
3.1 - Process integration
The calculator does not influence our decision making on whether or not a reduction is the right sanction to apply; that decision is taken based on the assessed severity of harm experienced by the consumer. The calculator is only used once the Green Deal team have decided to propose a reduction as the correct sanction, and is purely used to calculate what the size of the reduction will be and the new daily rate of loan repayments consumers will make.
3.2 - Provided information
The outputs of the calculator include the new daily rate of payment, the amount of the reduction, the percentage of the loan as sold that the reduction makes up and the amount overpaid since the effective date. These outputs are then used in notices sent to the consumer and affected parties which outline our decision and how the reduction was calculated.
3.3 - Frequency and scale of usage
The calculator is currently used on roughly ten cases per month by the Green Deal team on reduction decisions. It was used at this approximate level up to November 2022, and was only used intermittently during the period November 2022-April 2025 as there were large stretches of this time period where the Department could not issue reductions due to awaiting Tribunal decisions. From early 2026 the Department expects to have eliminated the backlog of Green Deal complaints and use of the reduction calculator will likely return to low levels as new cases come in.
3.4 - Human decisions and review
When using the calculator, human decision making is used in deciding to choose the sanction of reduction in the first place based on the Green Deal team’s assessment of the severity of harm experienced by the consumer. There is also occasionally some judgement to make on the consumer’s effective date of complaint, as consumer’s sometimes struggle to provide direct evidence of historic complaints made many years ago. The effective date selected can affect the output of the reduction calculator. Whenever updates are made to the tool these are made by the analyst who developed to the tool and quality assurance by analytical colleagues. Officials also review the outputs of calculator and validate that the results make sense and are in the boundaries of what we would expect.
3.5 - Required training
New Green Deal team members using the tool are given training on how to use it to produce the correct outputs for each complaint case. When complaints notices are Quality Assured within the Green Deal team before being sent out to consumers the outputs of the calculator are also checked by a Green Deal team member. Guidance instructions also exist within the calculator itself on how to use it.
3.6 - Appeals and review
Our decisions on Green Deal complaints are initially proposed through an intention notice. If we propose the sanction of reduction we calculate the proposed value of the reduction through the reduction calculator. There is a 6 week window for any affected parties to make representations in response to our intention notice, which we review to assess any impact on our decision. We then issue a final decision notice, which can be appealed by any affected party to the First Tier Tribunal.
Tier 2 - Tool Specification
4.1.1 - System architecture
The entire calculator is based on Microsoft Excel. It uses formulae and lookups to store data sent to us periodically by GDFC (again in Excel format) on all Green Deal loans we have active complaints on. The calculations tab uses inputs from the GDFC input data and BEIS input data tabs to calculate the figures needed, and shows these in the Outputs for sanctions tab.
4.1.2 - Phase
Production
4.1.3 - Maintenance
The tool is reviewed by an analyst whenever an adjustment is made to its calculations, and is reviewed by a Green Deal team member whenever the input data it uses is updated.
4.1.4 - Models
Loan calculation model, based on Excel’s loan calculation formulae.
Tier 2 - Model Specification
4.2.1 - Model name
Green Deal Reduction Calculator
4.2.2 - Model version
v22
4.2.3 - Model task
The model estimates the reduction that should be applied to mis-sold Green Deal loans, based on the energy efficiency measures installed under the loan and the original loan amount.
4.2.4 - Model input
The model inputs are information about customer’s Green Deal loans and average energy savings for different energy efficiency measures.
4.2.5 - Model output
The model outputs a loan reduction amount.
4.2.6 - Model architecture
The model is based on Excel’s loan calculation formulae. It uses estimates of average bill savings for different measures to calculate the maximum loan size a particular set of measures could support.
For a particular case (customer with mis-sold loan), the tool will estimate the maximum loan size the measures installed could support and compare this to the original loan. When the original loan is higher, the reduction is difference between the original loan and the maximum loan size that could be supported, subject to a minimum reduction of 30%.
4.2.7 - Model performance
The model is deterministic and well defined. The calculations are relatively simple.
4.2.8 - Datasets
Average savings for different energy efficiency measures, and customer’s Green Deal loan data.
4.2.9 - Dataset purposes
N/A
Tier 2 - Data Specification
4.3.1 - Source data name
- Average energy efficiency savings
- Customer Green Deal loan data
4.3.2 - Data modality
Tabular
4.3.3 - Data description
- Measure name, average energy savings, measure lifetime.
- Customer and loan information including name, address, loan amount, amount repaid, measures installed, start and end dates, etc.
4.3.4 - Data quantities
- This is a small table of a few rows and columns.
- This is a larger table of several hundred rows and dozens of columns.
4.3.5 - Sensitive attributes
- Some personal data such address.
4.3.6 - Data completeness and representativeness
The data is complete
4.3.7 - Source data URL
N/A
4.3.8 - Data collection
- This data comes from Departmental modelling of energy efficiency measures.
- This data is operational loan data.
4.3.9 - Data cleaning
N/A
4.3.10 - Data sharing agreements
Operational loan data is provided periodically by GDFC Assets, who hold the rights to receive repayments on Green Deal loans.
4.3.11 - Data access and storage
This data is only stored for loans with outstanding complaints; we do not request loans data on other Green Deal loans from GDFC and we remove the data for resolved complaints when the calculator is updated periodically.
The Green Deal team are responsible for storage and access on the team’s SharePoint drive, with access only allowed for team members and the analyst in charge of maintaining and resolving any issues with the calculator.
Tier 2 - Risks, Mitigations and Impact Assessments
5.1 - Impact assessment
No impact assessment completed, methodology introduced in August 2019. We have had input from Data Protection Colleagues on developing an updated privacy notice we issue consumers with for the consumer data we hold as part of our analysis of their complaint
5.2 - Risks and mitigations
We are aware that the tool does not take into account individual characteristics around consumer’s energy use or the characteristics of their home, but the First Tier Tribunal has endorsed this generalised approach at previous case appeals acknowledging the administrative burden attempting to work out a precise figure of loss for each consumer’s individual situation. We are as open as possible in the notices we issue about how our reductions are calculated. We accept some consumers may appeal the decision to apply a reduction instead of a cancellation of their loan, but by explaining the reduction calculations in detail and showing that it is a consistent process applied across cases we aim to avoid appeals from consumers about the level of their reduction. There is also the risk of accidental inputs causing the calculator to get the outputs wrong. We have found the risk of this to be low because it is designed in such a way that it is clear which sections should be left alone and which require inputted information, and furthermore we have now used the calculator extensively so have experience in spotting where outputs are unexpected and how to rectify any issues in the calculation.