Design of the Energy Company Obligation ECO4: 2022-2026
Applies to England, Scotland and Wales
Read the full outcome
Detail of outcome
The government’s response to the Energy Company Obligation (ECO4) consultation sets out the policy of the scheme from April 2022 until March 2026. The scheme, worth £4 billion, delivers energy efficiency and heating measures to homes in Great Britain:
- 10% of ECO3 delivery may be carried over into ECO4, subject to certain measure exclusions
- to support supply chain delivery, between 1 April 2022 and 30 June 2022, measures may be installed to ECO3 rules, subject to certain measure exclusions
- early delivery of ECO4 measures during any gap between ECO regulations will be allowed
- carry-under will not be implemented
The ECO4 scheme’s other main policies include:
- supporting households on the lowest incomes. Households in receipt of means tested benefits will be eligible. Up to 50% of the obligation target can be met under the reformed ECO4 Flex, which is designed to target households on low incomes, but not in receipt of benefits. ECO4 Flex will be voluntary for local authorities, the Scottish and Welsh governments, and obligated suppliers. The eligible pool will be at least 3.5 million homes
- only energy efficiency band D-G homes eligible for ECO4. For social housing and private rented accommodation, ECO4 will support the least efficient homes in bands E-G only
- an EFG minimum target, increased to 150,000 private tenure homes, pushing greater delivery to homes needing the most improvements and attracting higher scores
- a solid wall minimum target of 90,000 solid wall measures over the 4-year scheme
- a broken boiler and electric storage heating (ESH) replacement cap for efficient heating to 5,000 per year. Inefficient heating systems upgraded with efficient heating will not be subject to a cap. Repairs will be capped at 5,000 homes per year, subject to certain conditions
- 2 uplifts for innovation, so that improvements can be rewarded and differentiated between relative and substantial improvements against standard counterparts available in the market. Demonstration actions will be removed
- score uplifts of 35% in off-gas rural areas in Scotland and Wales to incentivise delivery in areas that may be harder to reach
The final policy decisions reflect the responses to the consultation and contribute to the government’s wider strategic aims including eradicating fuel poverty, achieving net zero commitments, and aligning with our heat and buildings strategy.
Next steps
- Government will lay affirmative regulations in Parliament
- BEIS will issue new guidance on innovation and the ‘new fuel poverty targeting methods’ approach as set out under ECO4 Flex, route 4
- BEIS will no longer publish a separate ECO Flex guidance. The conditions of referrals under ECO4 will need to meet the requirements in legislation and Ofgem will publish separate guidance for local authorities, the devolved administrations and suppliers
Detail of feedback received
We received 144 responses to the Energy Company Obligation consultation from a variety of stakeholders ranging from the larger energy suppliers and trade associations to individuals with an interest in energy efficiency and fuel poverty.
The responses were broadly supportive of the government’s proposals.
Original consultation
Consultation description
We’re seeking views on the future design of the Energy Company Obligation (ECO) scheme. This includes:
- continuing to target low income and vulnerable, and fuel poor households
- greater support and deeper retrofit for the least energy efficient homes, requiring homes to meet new minimum energy efficiency requirements
- the proportion of the scheme that can be delivered through local authority referrals, and by suppliers, under a reformed local authority and Supplier Flexible Eligibility route
- supporting innovation under ECO
- how ECO interacts with other grant funding
- views on a future supplier buy-out mechanism to enable small suppliers to participate in ECO, subject to primary legislation
Alongside this consultation we have published:
- a draft impact assessment (on this page)
- ECO evaluation reports
The consultation is open to all but of particular relevance to:
- energy suppliers
- energy efficiency installers
- energy efficiency measure manufacturers and associated software developers
- local authorities
- consumer groups
- academic groups
Update 11 August 2021
Consultation close date extended to 3 September 2021.
Update 2 August 2021
We updated the consultation document to:
- correct the email (page ii)
- correct the stated limit in table 11 on the number of ESH replacement and ESH repair uplifts allowed in a given package from “1” to “no limit” (page 80)
Read the BEIS consultation privacy notice.
Please don’t send responses by post to the department at the moment as we may not be able to access them.
Documents
Updates to this page
Last updated 1 April 2022 + show all updates
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Government response published.
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Consultation close date extended to 3 September 2021.
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We have updated the consultation document to: 1. correct the email (page ii), 2. correct the stated limit in table 11 on the number of ESH replacement and ESH repair uplifts allowed in a given package from “1” to “no limit” (page 80).
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First published.