The Green Deal allows consumers to take out loans to cover the cost of improving insulation. The European Commission said private companies could offer consumers loans for energy efficiency measures that would be paid off as part of monthly utility bills.
European Commission Vice President Joaquin Almunia said the deal wasn't a concern to competition regulators.
"The U.K. Green Deal allows consumers and businesses to improve the energy efficiency of their buildings without making huge upfront investments," he said in a statement. "This is another example of how our policy of state aid control can support private investment in energy saving and enhance competition at the same time."
An estimated 14 million homes in the country are said to not have adequate insulation. Last year, Gearoid Lane, managing director for British Gas New Markets, said about 25 percent of consumers' energy costs is lost because of poor insulation.