In the pursuit of achieving net zero emissions by 2050 and reducing its carbon footprint, the UK Government has implemented various policies and initiatives. One such initiative is the Energy Company Obligation (ECO) scheme. This blog will provide an overview of the history of ECO, its obligations to energy companies, and its significance in achieving a sustainable housing stock in the UK. We will also delve into the latest iteration of the scheme, ECO4, highlighting its unique features, funding allocation, qualification criteria, and available services.
The Evolution of the Energy Company Obligation into ECO4:
- ECO1 (2013-2015): The initial scheme focused on providing support to low-income households for energy efficiency measures. Energy suppliers were obligated to install energy-saving measures in qualifying households.
- ECO2 (2015-2017): Building on ECO1, ECO2 expanded the scope to include actions targeting vulnerable customers and introduced a new Affordable Warmth Obligation. This aimed to improve the heating and insulation of homes occupied by vulnerable individuals.
- ECO3 (2018-2022): The third phase of the scheme placed a greater emphasis on improving the energy efficiency of the UK’s housing stock. ECO3 focused on the delivery of affordable warmth and aimed to prioritize low-income and vulnerable households.
Objectives and Obligations of the Energy Company Obligation and ECO4:
The primary purpose of the Energy Company Obligation is twofold: achieving the UK’s net-zero target by 2050 and reducing carbon emissions from the housing stock.
- Net Zero Target: By implementing ECO, the UK Government aims to enhance energy efficiency in households, leading to reduced greenhouse gas emissions and progress towards the national target of net zero by 2050.
- Carbon Reduction: The scheme focuses on improving the energy performance of properties, particularly those occupied by low-income and vulnerable individuals, thereby reducing carbon emissions and fuel poverty. This is important to vulnerable individuals as carbon often equals money in the form of energy bills. Burn less carbon (energy) pay less on energy bills.
Introduction to ECO4:
ECO4 is the latest phase of the Energy Company Obligation scheme, introduced to further accelerate energy efficiency improvements in the UK. It builds upon the previous schemes but brings some notable differences.
- Enhanced Funding: The UK Government has allocated a substantial budget for ECO4 at around one billion pounds per year, with an aim to support a higher number of energy efficiency measures across eligible households.
- Extended Duration: ECO4 is set to run from March 2022 until 2026, providing a more extended period for energy companies to implement energy-saving measures.
Qualification and Access to ECO4:
Qualification for ECO4 can be achieved through different avenues, including benefit eligibility and the EcoFlex scheme, which involves engagement with local authorities
- Benefit Eligibility: Individuals receiving certain benefits may qualify for ECO4 measures. These benefits typically include Income Support, Jobseeker’s Allowance, Pension Credit, and others.
- EcoFlex Scheme: The EcoFlex scheme provides an opportunity for individuals to work with their local authorities. By engaging with the local authority, residents can access energy efficiency services, obtain guidance, and potentially qualify for ECO4 measures. You do not need to be on benefits to qualify. Under flex, if your household income is below £31,000 per year, Or you can evidence financial or fuel poverty such as arrears on energy bills or local support like free school meals or council take support. Or someone in your household suffers from a medical condition that a GP would support an ECO application then you also qualify. More information can be found here.
- You can find more information on the Ofgem website or via my website. If you also visit your local authority website or google your council’s names followed by ‘SOI’ you will find their statement of intent (SOI) which is basically their ECO policy, although this is not nationalised.
Available Services and Funding Allocation under ECO4:
Under ECO4, various services, and measures are available to improve energy efficiency in qualifying households. You can find a full list on my website page The funding allocation for these measures is determined based on Average Bill Savings (ABS).
- Services: The services covered by ECO4 include loft insulation, cavity wall insulation, heating system upgrades, smart thermostats, and more. These measures aim to reduce energy consumption and increase overall energy efficiency.
- Funding Calculation: The funding provided under ECO4 is based on the potential Average Bill Savings (ABS) resulting from the implemented energy efficiency measures. The greater the projected savings, the higher the allocated funding. The simple way to explain this method is this. Take a look at your current EPC here, or next door if you do not have one. The bigger the improvement from where you are to where you could be (typically C or better) the more funding that is available.
The UK Government’s Energy Company Obligation (ECO) has played a significant role in improving energy efficiency, reducing carbon emissions, and combating fuel poverty. Through its evolution from ECO1 to ECO3 and now ECO4, the scheme has consistently strived to enhance the energy performance of the housing stock. By providing funding, accessible services, and multiple pathways for qualification, ECO4 aims to make substantial progress toward achieving a sustainable and low-carbon future for the UK. My core role is to ‘hold your hand’ through this process from assessing your home to conducting a survey, introducing you to the best installers, and securing the funding for you.