BNP Paribas Personal Finance has linked up with energy giant E.ON to help drive energy efficiency in our homes.

The new partnership plans to bring green mortgages one step closer to the UK property market, by offering an affordable source of finance that could make energy efficiency home makeovers more accessible to millions.

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’re missing out on energy savings of up to £380 a year by not having basic measures in place.

What’s the aim of the partnership?

The Green Mortgage pilot aims to provide a competitively priced home improvement loan provided by BNP Paribas Personal Finance linked to a mortgage to fund energy efficiency solutions delivered by E.ON.

These could include insulation, energy efficient boilers and smart meters and thermostats. Smart energy technologies such as electric vehicle charging points, solar panels and battery storage could also be funded as part of the pilot, as well as heat pumps.

Under the new 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, help homeowners to identify what measures would deliver the greatest savings potential.

Huge challenge

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.

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.”

The two businesses are working towards further collaborations with building societies and banks to pilot and develop this financing solution to customers.