Consultation outcome

Energy Company Obligation 4 and the Great British Insulation Scheme: mid-scheme changes - final stage impact assessment

Updated 7 April 2025

Title: ECO4 and GBIS Mid Scheme Changes Final Impact Assessment

Type of measure: Final Stage Impact Assessment

Department or agency: Department for Energy Security and Net Zero

IA number: DESNZ005(F)-25-ERHA

Contact for enquiries: ecoteam@energysecurity.gov.uk

Date: 7 April 2025

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1. Summary of proposal

The government is updating the Great British Insulation Scheme (GBIS) to make it easier for the energy suppliers to meet their obligation, which should reduce costs and increase the volume of contracts available in the market. The accompanying government response provides details on the changes agreed which are: allowing 2 measures out of floor, loft and cavity wall insulation to be installed simultaneously as part of a GBIS project; allowing smart thermostats to be installed in the low-income group; and allowing delivery achieved under ECO4 rules to count towards an obligated supplier’s GBIS target^{[footnote 1]}.

The changes being implemented through this government response would help to ensure ECO4 and GBIS support our statutory objectives of improving as many fuel poor homes to Energy Performance Certificate (EPC) band C by 2030 as is reasonably practicable.

This government response also proposes a range of small changes to align with wider industry changes and address specific delivery issues. These changes aim to support increased uptake of measures in ECO4 and GBIS.

2. Strategic case for proposed regulation

Several market barriers and failures exist within the energy efficiency market for residential homes, which result in low delivery of energy and bill-saving measures. Without government intervention, these barriers prevent the deployment of these measures that reduce emissions and help support low-income households who often struggle to heat their homes.

The ECO4 and GBIS schemes place a legal obligation on larger energy suppliers to deliver energy efficiency measures to eligible households. They aim to reduce fuel poverty, improve security of energy supply, and reduce household carbon emissions to support the government’s net zero ambitions. Since 2013 ECO schemes have delivered around 4.1 million measures in around 2.5 million households, representing over 9% of households in Great Britain. The current scheme, ECO4, is due to end on 31 March 2026 and is worth £4billion. ECO4 covers a range of households with a keen focus on low income, vulnerable and fuel poor households. This includes those from EPC D-G homes and those on means tested benefits.

GBIS was launched after energy prices spiked in 2022 with the aim to reduce energy demand in the residential sector (contributing to the national ambition of a 15% reduction in energy consumption by 2030), lower energy bills, make progress against the government’s statutory fuel poverty and net zero commitments, improve energy security, and support jobs and growth.

In its original Impact Assessment, GBIS was estimated to be a £1billion obligation on energy suppliers to improve the energy efficiency of EPC D-G properties across 2 eligibility groups, a ‘low-income group’ and a ‘general group’, between Spring 2023 and March 2026. The scheme originally aimed to deliver 55,998,000 Annual Bill savings. However, there is strong evidence that GBIS is proving more difficult and costly to deliver than was originally estimated: Ofgem reported installation rates are lower than expected if the industry was on track to deliver their obligations by March 2026; and energy suppliers are reporting higher costs and supply chain constraints that limit their ability to fulfil their obligations.

By GBIS being hard to deliver, it is meant that it is difficult for suppliers to contract high volumes of installations at the prices they expect to pay. The price they expect to pay was set out in the Final Impact Assessment for the initial scheme and is linked to the amount they can recoup via customer bills under the price cap set by Ofgem. If they cannot contract volumes unless they pay a higher price than they can recover, the obligation is difficult to deliver (as suppliers can’t afford to meet the targets). Subsequently this means that the previously estimated emissions savings are not achievable.

The delivery figures taken from the Household Energy Efficiency National Statistics^{[footnote 2]} as of end of December 2024 are as follows for GBIS:

Table 1: Measures installed as at end December 2024^{[footnote 3]}

Metric	Count
Total number of homes	46,887
Low-income group	17,111
General group	29,579
Total number of measures	58,975
Loft insulation	16,295
Cavity wall insulation	24,778
Under Floor insulation	144
Solid wall insulation	3,254
Heating controls	12,093

In the absence of regulatory changes, energy suppliers could continue to under-deliver on their obligations and/or experience a higher than estimated cost to meet their delivery targets.

The government response that accompanies this Final Impact Assessment proposes changes that should improve delivery and increase confidence that the overall cost of compliance meets the original estimate of £1bn. Other minor changes are proposed in the consultation to align GBIS and ECO4 to wider industry changes.

This Final Impact Assessment provides analysis of the final policy design for the mid-scheme changes in GBIS and ECO4.

3. SMART objectives for intervention

As stated, GBIS has a wide eligible pool and supports installing insulation for a group of people who are not covered by other government schemes. As such, it is important to improve delivery under GBIS to reach these households. At the same time, there is a statutory duty to ensure that as many fuel-poor households as is reasonably practicable achieve a minimum energy efficiency rating of EPC Band C by 2030. The policy objective of the government response is to implement changes within both schemes to enable more progress towards meeting the full GBIS target as well as maintaining support for the supply chain that delivers ECO4. The intended effect of the government response is that obligated energy suppliers and other stakeholders build confidence in ECO4 and GBIS, resulting in the outcome of increased delivery of both schemes, particularly GBIS. The final options that were chosen from the consultation responses, should enable obligated suppliers to meet their GBIS obligation within the original total scheme cost of £1bn. Indicators of success that will be considered include the number of households treated, the cost per household, annual bill savings achieved, and the impact on fuel poverty.

The changes to the scheme in the government response aim to address some of the delivery issues that have been identified. These include: the constrained supply chain due to the limited number of installers; the competition from other more attractive schemes such as ECO4; the fixed scheme costs which obligated suppliers can recover under the energy price cap, in light of inflation rising faster than expected at the time of scheme design; difficulties contracting for projects in the general group which require customer contributions; and the move to single measure projects with relatively higher fixed costs compared to whole house retrofits. However, as we only have a year until the end of the GBIS and ECO4 schemes, radical changes can’t be achieved.

These drivers have been drawn out from the strong consensus detailed in the consultation responses. The accompanying government response will provide further information on this. Aside from the consultation responses, and previous stakeholder engagement, further evidence can be shown in the GBIS Statistical February 2025^{[footnote 4]} publication, where the average GBIS Cost is reported by suppliers to be £26.03/ABS, much higher than was assumed by the original impact assessment.

The outcome from the November 2024 Consultation is a set of policy changes that are published in the accompanying government response and the Final Impact Assessment below. The desired outcome of the policy changes is primarily to increase delivery of GBIS measures whilst keeping within the original £1bn spend envelope. The increase in delivery will be measured exactly by Ofgem, the scheme administrators. An increase in delivery is expected to be achievable and realistic, being enabled by the proposals implemented. The desired outcomes rely on having the maximum amount of time possible to take effect, since GBIS and ECO4 are due to end on 31 March 2026.

4. Description of proposed intervention options and explanation of the logical change process whereby this achieves SMART objectives

The preferred approach is to introduce the final options which were consulted on, in support of the overall objective of increasing delivery of measures under GBIS. These options were to allow loft and cavity wall insulation to be installed simultaneously as part of a GBIS project, however this has now been expanded to other low-cost measures such as floor; allowing smart thermostats to be installed in the low-income group; and allowing delivery achieved under ECO4 rules to count towards an obligated supplier’s GBIS target. The original GBIS policy does not allow multiple measures to be installed in 1 household, only a single measure. It does not allow smart thermostats in the low-income group currently, and ECO4 ABS previously had no contribution towards the GBIS ABS target.

The option to allow 2 measures out of loft, floor and cavity wall insulation, to be installed together, should achieve the objective of increased delivery by spreading the high fixed costs of Publicly Available Specification (PAS) compliance over more insulation measures. This would result in an increase in attractiveness of GBIS for installers and householders as it reduces the cost of delivering annual bill savings (the method through which suppliers comply with their obligation) through economies of scale. In particular, loft and cavity wall insulation are the most popular and cost-effective measures in GBIS and installing both, where possible, results in better outcomes for installers and householders. Adding in floor insulation should boost the delivery of this measure throughout the scheme whilst keeping costs of delivery relatively the same even more. Whilst this proposal theoretically reduces the number of homes able to be treated through GBIS compared to the original assumption, it should enable more delivery overall than would take place without the change.

The proposal to allow smart thermostats as an eligible secondary measure in the low-income group will achieve the objective of increased delivery by broadening the variety of measures on offer. The addition of these high-scoring, low-cost secondary measures would help make GBIS more appealing to the supply chain and assist with increasing levels of delivery. Heating controls, of which smart thermostats form a part, can improve energy efficiency by reducing heating hours when heat is not required. GBIS currently allows heating controls in the low-income group only, as a secondary measure in addition to a primary insulation measure. Certain control types are eligible measures, but smart thermostats have not previously been allowed. Smart thermostats offer several advantages to the household, such as remotely controlling their home temperature via a tablet, smartphone or desktop.

Allowing ECO4 delivery to count towards GBIS will achieve the objective of increased delivery because obligated suppliers have reported high volumes of ECO4 delivery in the market. Many obligated suppliers are now ahead of where they would need to be at this stage of ECO4. Maximising use of available ECO4 capacity would expand support for fuel poor homes. This will allow the ABS points an obligated supplier achieves under ECO4 rules to count towards their GBIS obligations.

Figure 1: ECO4 Compliance by Energy Company from Ofgem analysis^{[footnote 5]}

Source: Ofgem analysis of supplier data

Figure 1, above, shows a snapshot of energy suppliers’ approved and notified compliance against their ECO4 obligations as of 10 February 2025, just under three-quarters of the way through the scheme. The majority of suppliers are (pro-rata) at or above the level of compliance required to fully meet their ECO4 obligations. This does not reflect consistent performance across the lifetime of the scheme: ECO4 had a slow start to delivery due to delayed publication of the regulations, and so suppliers delivered at an increasingly fast pace as it developed.

Installation of measures has varied significantly since ECO4’s start in April 2022 to achieve these levels of compliance. Figure 2 below illustrates this point, where the peak installations occurred during the winter of 2023/24 and have since fallen back. Once they were on track to meet their obligation, suppliers started to cut back on their delivery. The peak was a sustained peak, which indicates that the supply chain is capable of servicing that level of installation. This suggests that there is capacity within the supply chain to deliver a greater number of ECO4 measures than required to meet suppliers’ ECO4 obligations.

Figure 2: ECO4 Installation Rate^{[footnote 6]}

Source: DESNZ Household Energy Efficiency Statistics

Additionally, the section on Q7 in the government response gives pessimistic supplier predictions as to what proportion of their obligation is achievable without changes: “Most obligated energy suppliers were confident that they could deliver 25% of their GBIS obligation. Some thought they could achieve up to 50%. No obligated energy supplier thought they could achieve their full GBIS obligation within the original cost envelope”. The section on Q5 explains that delivering GBIS has been difficult, and sets out some of the reasons stakeholders provided as to why, such as “the difficulty in finding empty cavity walls; a limited supply chain; competition from more attractive schemes like ECO4; fixed costs that can be recovered under the price cap; challenges contracting in and collecting customer contributions from the general group; higher inflation than expected; single measure projects with high fixed costs; and the score for loft insulation alone not being commercially viable in some instances.” The response to Q8 gives more colour on supplier attitudes to ECO4 in preference to GBIS, noting that “ECO4 is cheaper to deliver per annual bill saving achieved”, and that “installers would prefer to do ECO4 work rather than GBIS since the latter is seen as less attractive and more uncertain”.

The above evidence suggests that allowing ECO4 delivery to contribute to GBIS compliance will be a key factor in enabling this delivery.

These changes all meet the SMART criteria of being specific, achievable, measurable, realistic and time-bound. They are specific because they aim to make the achieved Annual Bill Savings (ABS) as close to the target as possible. They will be measured using installation figures reported to the department by Ofgem. It is an achievable objective, given the options identified through our own analysis and from stakeholder feedback. The options are realistic because we have the powers to make these changes to scheme rules, and stakeholder feedback was positive around them. The objective to increase delivery will have the greatest effect where the preferred option has the maximum amount of time possible to be implemented, which is why the consultation gathered views on the early introduction of changes before the updated legislation was agreed by Parliament. Therefore, it meets the objective of being time bound, as the scheme finishes at the end of March 2026.

The consultation did propose another option of introducing an alternative installation standard Trust Mark Licence Plus (TMLP), which would have reduced the cost of loft insulation. However, this proposal was not taken forward in order to reduce market confusion/diversion from other issues around the rectification of solid wall insulation. Loft insulation, for instance, can still be a lower cost installation than before these regulatory changes, as it can now be installed alongside another measure, incurring the cost of PAS compliance just once for the multiple measures.

These options are technical changes to rules of existing schemes and will be introduced as an update to existing regulations, the Electricity and Gas (Energy Company Obligation) Order 2022, and the Electricity and Gas (Energy Company Obligation) Order 2023. The impacts of the options have been quantified using well-understood modelling techniques employed across several schemes in DESNZ.

5. Description of shortlisted policy options carried forward

The short list for the consultation is as follows: 

Option 1: Do not change the regulations:  This option is continuing GBIS as normal where no changes are made. This option would mean that the targets set for obligated suppliers are almost certain to be missed. Obligated suppliers would incur higher costs through their delivery than they are able to recover through the price cap, which is set by Ofgem. This would not be an acceptable option because there would in effect be a target that suppliers are obligated to meet at a cost that is higher than they can recover from consumers.   

Option 2: Do minimum: This option is to tweak the scheme to allow multiple measures; allowing installation of 2 of the following: floor, loft or cavity wall insulation in the same retrofit. Suppliers and installers have called for this change. It is considered efficient to install 2 of these measures alongside each other and they both are estimated to be roughly the same cost, so is sensible to open up the option to do this within the scheme. This change would also bring down the proportion of fixed costs per retrofit and increase the relative profitability of the scheme, thus making it more attractive. Whilst a positive change, it is unlikely that this change alone would be enough to increase scheme delivery sufficiently to meet most suppliers’ obligated targets.    

Option 3: Preferred way forward: This option is considering making changes to the scheme that will likely improve delivery and help obligated suppliers meet their targets at the original £1 billion cost.

The changes are: 

• allowing 2 of the following (floor, loft or cavity wall insulation) in the same project in GBIS 
• allowing smart thermostats to be included in the low-income group in GBIS 
• allowing ECO4 delivery to count towards GBIS, providing an uplift in the ABS delivered
• an uplift in the GBIS delivery above 25% of suppliers’ GBIS ABS targets

The 3 options in this shortlist were narrowed down to 1 by considering the implications of each and reviewing the consultation responses. The impacts on the installation supply chain, obligated suppliers, and consumers were considered and it was clear that changes beyond the minimum possible were required to achieve the suppliers’ GBIS targets.  

In light of the obligation showing a high risk of being under-delivered unless it was changed, the preferred option should have a positive impact on small, micro and medium-sized businesses, if they participate in the ECO4 or GBIS schemes. The impact of the preferred option would be to increase delivery and the availability of contracts from obligated suppliers to deliver GBIS and ECO4. GBIS would be made more attractive due to the options included in the preferred way forward because the cost of delivering some measures would fall and suppliers would have a greater range of measures and households from which to meet their targets.  

There is no view over the most likely combination of GBIS and ECO4 delivery that will maximise the likelihood of GBIS targets being met, as both schemes are modelled to fully deliver the amounts determined in the respective scenarios.

Analytical approach and assumptions

The analytical approach to estimating the impact of these policy changes is the same as that laid out in the 2023 GBIS (formerly known as ECO+) Final Impact Assessment (IA)^{[footnote 7]} and 2022 ECO4 Final Impact Assessment.^{[footnote 8]} The National Buildings Model (NBM) has been used to simulate the cost of delivering both schemes, whereas the above IAs were modelled in the National Household Model – the NBM’s predecessor. Some changes in results will arise because of this change in model environment, but most differences will come from changes to cost assumptions and the discrete policy changes. 

The cost assumptions underpinning the modelling of the above policies have been updated since these IAs were undertaken, reflecting the sharp rise in the cost of some measures since they were published. Other changes include updated evidence on the proportion of cavity wall insulation (CWI) that is easy to treat and hard to treat. This reduces the amount of low-cost, easy to treat CWI that can be found and treated. The effect of this has been to drive up the cost of the marginal CWI installation, which produces more economic rent in the market as a result.

The compliance costs of PAS have also been updated based on the responses received from the consultation. These costs are presented in the Summary: Analysis and Evidence section. This section also explains how the analysis methodology has altered compared to the options assessment, incorporating the final decisions from the consultation process.

The full range of policy changes are reflected in the analytical approach and costs, such as the ability to install 2 measures from floor, loft and cavity wall insulation alongside each other, whilst keeping the option to install a single measure too.

6. Regulatory scorecard for preferred option

Part A: Overall and stakeholder impacts

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Overall impacts on total welfare

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Description of overall expected impact:

Directional rating: Positive

The overall expected impact of the regulation on social welfare is expected to be positive. Changes are designed to make the scheme easier to deliver, to increase the certainty of delivery compared to the there being no policy changes. Further, incorporating ECO4 delivery increases the proportion of low-income households receiving measures, which helps the equity-weighted perspective of the cost-benefit analysis.

The figures, below, show the model results that enable a cost per Annual Bill Saving (£/ABS) to be calculated. They show the costs and benefits of each scheme, assuming GBIS and ECO4 schemes each deliver a 25:75 split, respectively, of the obligated amount of GBIS ABS points.

The estimated cost of delivering Annual Bill Saving is estimated to be

• £26.51/ABS for GBIS delivery
• £19.32/ABS for ECO4 delivery

The total cost of delivering these ABS points to energy suppliers is the same as in the original regulations’ final stage Impact Assessment, other than an adjustment to account for a lower amount of household contribution. A currency conversion is used to adjust the value of all ECO-compliant delivered points counting as GBIS compliance; and GBIS-compliant delivered points above the 25% threshold of suppliers’ total GBIS ABS obligation target.

The final conversion factors that convert Annual Bill Savings to GBIS compliance are calculated to be:

• 1.251 for ECO4 delivery (meaning £1 ABS delivered through ECO4 equals £1.251 ABS for GBIS)
• 1.716 for GBIS delivery above 25% of the obligation (meaning £1 ABS delivered through GBIS equals £1.716 ABS for GBIS)

The overall impact of the scheme’s changes is expected to be positive because it gives a much higher level of confidence that the ABS points will be delivered within the original cost envelope.

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Monetised impacts:

Directional rating: Positive

Total £ NPSV of GBIS-compliant delivery: £97.1m

Total £ NPSV of GBIS-compliant delivery (Equity weighted): £37.7m

Total £ NPSV of ECO4-compliant delivery: £80.5m

Total £ NPSV of ECO4-compliant delivery (Equity weighted): £316.3m

Combined for full delivery (25% GBIS and 75% ECO4):

NPV = £177.7m
Equity weighted NPV = £353.9m

Table 2: Net Present Value Breakdown Summary

Metric	GBIS Compliant Delivery (25%)	ECO4 Compliant Delivery (75%)
Total Discounted Costs	£192.6m	£671.8m
- Capex (install cost)	£78.8m	£383.0m
- Capex (reinstall cost)	£2.0m	£122.8m
- Hidden landlord and tenant costs	£8.5m	£22.4m
- Search Costs	£19.2m	£20.0m
- PAS Costs	£54.3m	£55.9m
- Admin Costs	£14.5m	£67.6m
- Customer Contributions	£15.4m	NA
Total Discounted Benefits	£289.7m	£752.4m
- Energy Savings	£91.9m	£356.7m
- Air quality	£17.7m	£68.2m
- Carbon Traded	£2.4m	£24.8m
- Carbon Non-Traded	£149.0m	£259.4m
- Comfort taking	£28.7m	£43.2m

Equity weighted (EW) NPV includes all of the above costs and benefits applied with equity weights, with the addition of retail energy saving benefits (£108.7m for GBIS, and £725.8m for ECO4). However, the headline main NPV does not include retail energy saving benefits.

The final equity weighted total discounted costs and benefits will be slightly different as we have applied equity weights to all of the individual costs and benefits. (Shown in the final combined discounted equity weighted table below)

Combining the costs and benefits of both these schemes together, we get the following:

Table 3: NPV and Equity-Weighted NPV

Metric
Total discounted costs	£864.4m
Total discounted benefits	£1,042.1m
Main NPV	£177.7m
Total discounted costs (EW)	£829.1m
Total discounted benefits (EW)	£1,183.0.m
Equity weighted NPV	£353.9m

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Non-monetised impacts:

Directional rating: Positive

The main non-monetised benefit of the policy’s changes is the increased certainty of delivering GBIS within the original spend envelope. Without these changes, the scheme is likely to have been under-delivered by energy suppliers facing higher costs of compliance than they are able to recover through energy bills. This would have led to fewer measures being installed overall, and the prospect of a lengthy process to agree fair settlements or penalties for those suppliers who had failed to meet their obligation targets.

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Any significant or adverse distributional impacts?:

Directional rating: Neutral

No.

A Public Sector Equality Duty Impact Assessment (PSED) has been produced and attached as part of this analysis. The results illustrate no disproportionate impacts on those from a minority background.

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Expected impacts on businesses

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Description of overall business impact:

Directional rating: Positive

The overall impact to businesses is expected to be positive as we are making delivery easier and cheaper. However, there is no change to the equivalent annual net direct cost to business (EANDCB) as energy suppliers’ costs are passed through to consumers. The changes proposed in these regulations are designed to keep the budget profile the same as in the original regulations. As such, there is no change to the EANDCB estimated in the original final Impact Assessment.

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Monetised impacts:

Directional rating: Neutral

In both the ECO and GBIS schemes, energy suppliers pass their compliance costs onto their domestic energy consumers. An allowance for this cost is made in the Ofgem price cap for default energy tariffs to allow these costs to be recovered. Given there is no additional cost to energy suppliers following the changes suggested in this consultation, there will be no change in the EANDCB or EANDCH, as no change in pass-through costs to consumers are expected.

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Non-monetised impacts:

Directional rating: Positive

Without these changes, the scheme is likely to have been under-delivered by energy suppliers facing higher costs of compliance than they are able to recover through energy bills. This would have led to fewer measures being installed overall, and the prospect of a lengthy process to agree fair settlements or penalties for those suppliers who had failed to meet their obligation targets.

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Any significant or adverse distributional impacts?:

Directional rating: Neutral

No.

We do not anticipate any significant distributional impacts on businesses.

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Expected impacts on households

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Description of overall household impact:

Directional rating: Positive

​​The impact to households is expected to be positive. By including ECO4 delivery, the equity-weighted NPV improves as a higher proportion of low-income households are expected to receive measures. This is also reflected in the number of low-income households treated in our approach compared to there being no policy changes. ​

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Monetised impacts:

Directional rating: Neutral

There is no individual household NPV and, as stated above, there is no change to the EANDCH.

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Non-monetised impacts:

Directional rating: Neutral

All other key costs and benefits noted from the original GBIS FIA have been monetised.​​

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Any significant or adverse distributional impacts?:

Directional rating: Neutral

No.

​​The inclusion of ECO4 delivery will help more low-income households. The PSED details other expected impacts, which shows the impact of ECO4 delivery increasing the representation of elderly, ethnic minority and disabled households. It also increases the regional spread to be more representative of the country as a whole. ​

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Part B: Impacts on wider government priorities

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Business environment:

Directional rating: Supports

This will impact the ease of doing business for obligated suppliers, as the cost of delivering the obligation will be in line with the original intention of the policy and increase delivery certainty.

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International Considerations:

Directional rating: Neutral

There is no likely impact on international trade nor investment.

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Natural capital and Decarbonisation:

Directional rating: Supports

The schemes were designed to decrease consumer bills and improve household insulation which would thus decrease energy consumption and reduce carbon emissions. As it is unclear by how much the scheme is likely to under-deliver without these policy changes, it is difficult to assess the impact on carbon savings. However, it is likely to deliver more carbon savings.

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7. Monitoring and evaluation of preferred option

The strategic aims of the ECO4 and GBIS mid-scheme changes align with the intended outcomes and impacts of GBIS scheme, as shown in the Theory of Change in the below Figure. These are to: better insulate homes, reduce energy bills, and contribute towards the UK’s fuel poverty and net zero targets.

The Theory of Change shows how we expect the GB Insulation Scheme to achieve its high-level aims after considering the proposed mid-scheme changes. It sets out the pathways to impact which result from the scheme activities, outputs and outcomes. This Theory of Change has been developed in consultation with those involved in policy design and steered by an M&E adviser in the Department for Energy Security and Net Zero (DESNZ). Updates have been made to the Theory of Change as the policy design has evolved.

The monitoring and evaluation (M&E) approach will assess the extent to which the proposed changes have been successful in achieving the aims of the GBIS policy.

Evaluating proposed changes to GBIS

The overall approach to M&E accounts for the strong existing evidence around ECO-GBIS scheme implementation, current and future evaluation activity on ECO4, and the quality of scheme data available. To assess performance of the scheme against its stated objectives, we will continue to track the outcomes of the scheme using the Ofgem data and publish this as GBIS Official Statistics.

Alongside this, we will evaluate the implementation of the proposed changes through the existing GBIS evaluation that focuses on fieldwork with households and non-household stakeholders. This would provide further, more detailed evidence on outcomes of the suggested changes and will also involve deep dives into priority areas of policy interest. The design of the evaluation is such that we will be able to explore questions of specific relevance to the delivery of the GB Insulation Scheme and the proposed changes in Wave 2 and Wave 3 of the existing GBIS evaluation. Whilst ensuring resource is focused on areas where there is not already extensive evidence from previous and ongoing evaluations of the ECO and GBIS scheme. This is therefore deemed to be the most cost effective and proportionate approach

The existing evaluation of GBIS is in progress, having commenced in March 2024 and scheduled to conclude in March 2027. The GBIS evaluation is a process and outcome evaluation, focusing on understanding how the scheme is delivered, whether it is being delivered as intended, the quality of its delivery, and any issues or challenges encountered during implementation. This type of evaluation is crucial in ensuring that schemes achieve their intended outcomes. The mid scheme changes will be accommodated by ensuring that stakeholder views are taken into consideration during the next wave of research activities.

The diagram below shows the current GBIS Theory of Change, including the proposed changes in activities.

Figure 3: GBIS Theory of Change

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Text version of Figure 3:

Inputs / Activities & Policy mid-changes (PMC):

• DESNZ staff resource to draft/amend legislation and develop robust policy rationale
• HMT agrees price cap of £1bn
  • Website development, guidance and comms
  • Ofgem scheme set up and delivery
    • Ofgem administration of the scheme
    • Suppliers contract installations
• Trustmark monitoring standards and compliance of installations (PMC)
• Installers find homes and install measures (inc. CWI + LI allowed and smart thermostats for LI income)
• Local authority staff administer flexible eligibility

Outputs:

• Legislation is enacted to enforce new policy, within desired ministerial timeframes
• Website is live, allowing people to sign up for measures
  • Measures are installed in people’s homes to Trustmark-assured standards, by competent, skilled installers
    • Consumers fuel bills savings start to acrue
      • Consumers become aware of the benefits of energy efficiency and GBIS
      • Consumers build trust in the EE market
    • Payments are made to installers
• Non-compliant measures are reftified (Trustmark monitoring)

Outcomes:

• Improved health and wellbeing due to increased thermal comfort
  • Better insulated homes
  • Reduced energy demand
    • Reduced energy bills, increased houshold resilience to higher costs of living
• Supports jobs growth in energy efficiency sector. Installations concentrated in north of England, contributing to levelling up agenda

Impacts:

• Progress towards Net Zero and GHG emissions reductions
• Increase UK energy security
• Progress towards statutory Fuel Poverty targets

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The GBIS evaluation includes primary data collection with:

• participating households (surveys and pre-/post- installation interviews);
• installers and the supply chain (surveys and interviews)
• energy suppliers (case studies)

These will allow us to collect evidence on the proposed changes both to understand the implementation of the scheme and to assess perceived outcomes of the proposed policy changes.

The key aim of the proposed changes is to increase delivery on GBIS. The evaluation of the mid-scheme changes will focus on analysing how the proposed changes affected the delivery of GBIS. The table below maps the impact of proposed changes to the evaluation questions and the sub-questions that would be asked.

Table 4: Proposed Changes and Evaluation Questions

Proposed changes	Aim of proposed changes	Impact	Evaluation Question	Existing data collection that will be used
Allowing loft and cavity wall insulation in the same project in GBIS. Allowing smart thermostats to be included in the low-income group in GBIS.	Increased delivery from increase in attractiveness of GBIS for installers and householders. Smart thermostats deliver savings to households at a small cost.	Multiple Measures installed in households	What is the experience of households who receive GBIS? What are the reported outcomes for households?	Household surveys and interviews. Installer surveys and interviews.
Allowing ECO4 delivery to count towards GBIS	Increase delivery maximises high volumes of ECO4 capacity in the market	Higher delivery. Stable and continuous business for supply chain.	How is GBIS delivered by the supply chain? What is the experience of the supply chain involved in the delivery of GBIS? How does the GBIS ABS market work?	Installer surveys and interviews. Supplier case studies.

Timelines

Our evaluation plan allows for flexibility as it is split into 3 waves of research. This means that at the beginning of each wave there is an opportunity to review the evaluation questions according to policy needs and policy changes, and that the results of each wave will provide an opportunity to answer policy questions and to inform any policy amendments. 

The anticipated sequencing of the fieldwork activities is set out in diagram below. We will explore the opportunity to shift some supply chain research to 2026, or supplement it with further research in order to be able to look at the outcomes of the changes on supply chain stakeholders.

Figure 4: Proposed Evaluation Timeline

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Text version of Figure 4:

(GBIS Scheme Delivery & installation, Q3 2023/24 to Q3 2026/27).

A: Household Research:

	Wave 1 (2024/25)	Wave 1 (2025/26)	Wave 1 (2026/27)
A1: Enhanced Interviews	Household interviews: pre-installation (n=20) & post installation	-	Household interviews: pre-installation (n=20) & post installation (n=20)
A2: Surveys	-	Household surveys (n=2,000)	Household surveys (n=2,000)
A3: Telephone Interviews	-	Household follow-up interviews x50	Household follow-up interviews x50

B: Supplier Research:

	Wave 1 (2024/25)	Wave 1 (2025/26)	Wave 1 (2026/27)
B1: Surveys	-	Supply chain survey	-
B2: Telephone Interviews	Suppliers and supply chain interviews	Suppliers and supply chain interviews	-
B3: Case studies	Supplier case studies x2	Supplier case studies	-

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Our research will use the following data sources:

• Ofgem database, containing addresses of GBIS beneficiary households. We will use this database to draw a representative sample of households for the household survey
• TrustMark database, containing business names of installer companies who have registered installations of GBIS measures. We will use this database to define a sample of installers, retrofit assessors and retrofit coordinators for the supply chain interviews

We will carry on collating and publishing the monthly official statistics for ECO and GBIS.

Evaluation of GBIS

The existing GBIS evaluation will provide information relating to the following priority areas:

• Socio-demographics: motivations, satisfaction and characteristics of ‘able to pay’ or ‘general’ group households
• Customer journey: There are multiple possible routes to enter the scheme, and multiple variations in the delivery approach of GBIS. The data collected through the evaluation will be used to develop a journey map which visually demonstrates the experience of customers receiving GBIS measures
• Customer satisfaction: customer satisfaction with the scheme and with the installed measures
• Customer outcomes: We will measure perceived outcomes such as perceived changes in energy consumption, perceived energy bill savings, changes in thermal comfort, health and wellbeing
• Customer contributions: The evaluation will investigate how contributions are agreed, how much and which households contributed, and the views on making/requesting contributions – from both supply chain and customer perspectives
• Annual Bill Savings (ABS) market: The evaluation will explore how the price per ABS is calculated, how it has changed throughout the course of delivery and the considerations made when supplier procure partners to deliver ABS. To address this evidence gap, data collected will be used to develop an ABS map which visually represents the ABS market and its components
• Delivery journey: The research will focus on identifying the typical delivery journey configurations that exist, as well as the different roles involved in delivery. Data collected will be used to develop a journey map which visually demonstrates the delivery journey of the scheme
• Supply chain perceptions: The research will investigate the attitudes of those involved in the delivery of the scheme ‘on the ground’ (i.e., energy suppliers, installers, managing agents, retrofit coordinators, retrofit assessors and lead generators)
• Commercial attractiveness: Following from research exploring supply chain perceptions and the market for ABS; overall indications of the profitability, risk, and attractiveness of different installation strategies will be examined, to understand the overall commercial attractiveness for suppliers

8. Minimising administrative and compliance costs for preferred option

Administration costs have not increased, nor changed because the costs of administering ECO4 and GBIS remain the same. The preferred option ensures that there is no change to consumer bills, so the analytical model has used the same administrative and compliance cost as stated in the GBIS Final Impact Assessment.

The cost of complying with PAS 2035/2030 was modelled for ECO4 and GBIS. The costs of PAS have been revised according to the responses collected from the consultation. These have been revised for the beginning of the scheme, as well as the final year of the scheme where the new policy options apply. Detail on these costs can be found in the Summary: Analysis and Evidence section, below.

Declaration

Department: Department for Energy Security and Net Zero

Contact details for enquiries: ecoteam@energysecurity.gov.uk

Director responsible: Jessica Skilbeck

I have read the Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options.

Signed: Jessica Skilbeck

Date: 7 April 2025

Summary: Analysis and evidence

The analysis presented here reflects the mid-scheme changes for the remainder of the scheme.

The alternative scenario – the original policy without policy changes - is difficult to present with confidence, as the risk of non-delivery associated with it is very high. Because of a lack of evidence of how much under-delivery is likely without policy changes, this scenario has been modelled as being fully delivered. As delivery of GBIS has been more difficult, and costs have increased since the regulations were made, full delivery in this scenario is expected to breach the cost envelope envisaged in the initial modelling before it was launched. The analysis, below, outlines the steps to ensure that cost is brought back to its initial agreed envelope of £1bn. The policy changes introduced by these regulations have all been incorporated in the modelling. The most significant changes have been to allow ECO4 delivery to count towards suppliers’ GBIS obligation and a further uplift in GBIS ABS points above the 25% delivery threshold. For this, model runs for both policies have been undertaken to determine the total cost of compliance with GBIS without policy changes and without under-delivery, and the cost of ECO4 delivery alongside it. This is used to determine the cost adjustments that have been introduced to bring the overall cost of GBIS compliance back down.

Beyond this, there are some minor changes from moving to a new modelling environment. The analysis for the original Final Impact Assessment (FIA) for GBIS and ECO4 was produced using the National Household Model (NHM). The new National Buildings Model (NBM) has been used to produce the latest analysis but keeps the fundamental logic of how the policy is modelled, using the concept of a prevailing market price as a way of allocating measures to homes, and determining the costs of delivery to energy suppliers. Some of the methodological differences between the NHM and NBM include how comfort taking is calculated and how households are sampled. Neither of these have a material impact on the modelling results.

The Green Book Supplementary guidance has been used to quantify some of the costs and benefits presented in this analysis, along with the revised costs detailed in the Evidence section, below.

An additionality factor has been applied to all the costs and benefits within GBIS, which accounts for all installations that would have been installed by the general group in the absence of policy changes. The assumption is that there will be 20% deadweight for the general group. This factor was calculated using the number of low-income group and general group treated, the percentage will alter depending on how many general group homes are treated. The additionality factor applies to the baseline GBIS policy without policy changes too, as this was included in the original ECO+ (GBIS) Final Impact assessment when the scheme launched. Scaling of figures has also occurred for both, to ensure that the number of ABS points are being met through the modelling as the outputs are not consistently accurate due to randomisation.

Detailed below is how the main policy changes have been modelled, and the main costs that have been updated.

Installing multiple measures: Energy suppliers are now permitted to install multiple measures to the same household. This means that only 1 cost of PAS compliance is incurred when installing loft, cavity wall insulation and/or underfloor insulation alongside each other.

Household contributions: An adjustment has been included to take into account customer contributions. The original FIA and previous options assessment (OA) had assumed this would be £80m. However, as the requirement is now only to deliver 25% of energy suppliers’ GBIS obligation though GBIS compliance, this customer contribution element has been reduced to £20m. Therefore, the total cost of compliance with the obligation is £1.02bn, but the assumed cost to energy suppliers stays at £1bn.

ECO4 counting towards GBIS compliance: As ECO4 delivery now counts towards GBIS compliance, the cost of delivering ABS points through GBIS and ECO4 was modelled. The consultation responses revealed that the industry agreed with a minimum delivery through GBIS of 25% and a maximum of 75% of delivery allowed through ECO4. This is the breakdown that has been modelled. ECO4 compliance was modelled without the EFG and solid wall insulation minima for the final year, as it was deemed unlikely that either of these would be used to comply with GBIS if cheaper delivery approaches could be used instead.

Currency conversion: To bring the total cost of GBIS delivery for energy suppliers to £1bn, conversion factors have been introduced to ensure this budget is hit, irrespective of the proportions of GBIS to ECO4 finally delivered beyond the required minima. The final adjustment factors that were calculated are 1.716 for GBIS for any delivery that is above the 25% threshold, and 1.251 for any ECO4 delivery. The ECO4 factor was calculated by taking the cost per ABS delivered for ECO4 (£19.32/ABS) and dividing this by the remaining average cost per ABS (that still needs to be delivered after the initial 25% is delivered through GBIS delivery) to bring the total scheme cost to £1bn (£15.45). For the GBIS factor, the cost per ABS as calculated by dividing the cost per ABS for full GBIS delivery (£26.51) by the remaining average cost per ABS that still needs to be delivered after the initial 25% is delivered through GBIS delivery (£15.45), as above.

Cost assumptions: The Department has updated the assumed costs of installing insulation from those used in the GBIS^{[footnote 9]} and ECO4^{[footnote 10]} Final IAs. The department’s new cost models for these insulation measures are the same as the GBIS Final IA increase.

The assumed costs of installing heating controls remained the same as the GBIS Final IA, with the additional cost of smart thermostats. Smart thermostats have an assumed cost of £200 per unit (in 2022 prices).

The consultation process has also led to revisions in the assumed PAS compliance costs, following feedback received from obligated suppliers. The PAS costs that were used in the GBIS Final IA and ECO4 Final IA, per dwelling, were £990 (2021 prices) for purpose-built high-rise flats and £950 (2021 prices) for all other dwelling types. The updated PAS costs used in the current modelling included an additional £100 in all years prior to 2025, and subsequently a further £100 increase for retrofits carried out in 2025, to account for the expected increase following the use and implementation of the updated PAS 2035/2030 standards.

Summary results

The results presented, below, show the modelling results for the policy changes being introduced (Agreed Policy). The agreed policy is what is expected to be delivered instead, with the package of measures enabling the overall cost of delivery to meet its original spend envelope.

Price base year: 2022
PV base year: 2023

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Agreed policy changes

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Net present social value

NPSV of GBIS-compliant delivery: £97.1m

NPSV of GBIS-compliant delivery (equity-weighted): £37.7m

NPSV of ECO4-compliant delivery: £80.5m

NPSV of ECO4-compliant delivery (equity-weighted): £316.3m

Combined NPSV of GBIS and ECO4-compliant delivery: £177.7m

Combined NPSV of GBIS and ECO4-compliant delivery (equity-weighted): £353.9m

The original policy modelled without under-delivery gives an NPSV of replacement of GBIS measures £369.6m and equity-weighted NPSV of £113.1m. The NPSV reduction in the agreed policy changes scenario results from it being a smaller scheme. The equity-weighted NPSV increases, though, because of the higher proportion of low-income homes targeted by the addition of ECO4 delivery.

Table 5: Measures Expected to be Installed

Metric	GBIS compliance (25% of delivery and £20m h’hold contributions)	ECO4 compliance (75% of delivery)	Total for both schemes
Total Homes	62,000	52,000	114,000
Low Income Group	8,000	30,000	38,000
LA Flex Group	5,000	22,000	27,000
General Group	48,000	NA	48,000
Total Measures	83,000	126,000	209,000
Loft Insulation	18,000	18,000	36,000
Cavity wall insulation	47,000	8,000	55,000
Floor insulation	6,000	3,000	9,000
Solid wall insulation	0	11,000	11,000
Heating controls (room thermostats, thermostatic radiator valves)	7,000	8,000	15,000
Smart thermostats (final year of GBIS scheme only)	4,000	NA	4,000
Air Source Heat pump	NA	13,000	13,000
Gas boiler	NA	5,000	5,000
Double glazing	NA	3,000	3,000
Draught proofing	NA	24,000	24,000
Hot Water Tank insulation	NA	13,000	13,000
Hot water tank thermostats	NA	3,000	3,000
Solar PV	NA	5,000	5,000
Time Temperature Zone controls	NA	12,000	12,000

Table 6: Net Present Value Breakdown Summary

Metric	GBIS Compliant Delivery (25%)	ECO4 Compliant Delivery (75%)
Total Discounted Costs	£192.6m	£671.8m
- Capex (install costs)	£78.8m	£383.0m
- Capex (reinstall costs)	£2.0m	£122.8m
- Hidden landlord and tenant costs*	£8.5m	£22.4m
- Search Costs	£19.2m	£20.0m
- PAS Costs	£54.3m	£55.9m
- Admin Costs	£14.5m	£67.6m
- Customer Contributions	£15.4m	NA
Total Discounted Benefits	£289.7m	£752.4m
- Energy Savings	£91.9m	£356.7m
- Air quality	£17.7m	£68.2m
- Carbon Traded	£2.4m	£24.8m
- Carbon Non-Traded	£149.0m	£259.4m
- Comfort taking	£28.7m	£43.2m

*Hidden costs were calculated under the assumption that all homes treated were owner-occupier. There is a small percentage in the results which are housing association and PRS.

Equity weighted (EW) NPV includes all of the above costs and benefits, with the addition of retail energy saving benefits. The final equity weighted total discounted costs and benefits will be slightly different as equity weights have been applied to all of the individual costs and benefits. (Shown in the final combined discounted equity weighted table below.)

Combining the individual costs and benefits of both these schemes together, we get the following:

Table 7: NPV and Equity-Weighted NPV

Metric
Total discounted costs	£864.4m
Total discounted benefits	£1,042.1m
Main NPV	£177.7m
Total discounted costs (Equity Weighted)	£829.1m
Total discounted benefits (Equity Weighted)	£1,183.0m
Equity weighted NPV	£353.9m

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Public sector financial costs

As a supplier obligation financed by energy bill customers, there is no impact on public sector finances.

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Significant un-quantified benefits and costs

All key costs and benefits noted from the original GBIS FIA have been monetised.

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Key risks

The risks to delivery are lower because of the policy changes. They are still present, however, because of the slower pace by which the scheme is currently being delivered.

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Results of sensitivity analysis

No sensitivity analysis was undertaken due to the fact that the schemes are already in delivery, and minor changes are being made.

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Evidence base

Problem under consideration, with business as usual, and rationale for intervention

GBIS is proving more difficult and costly to deliver than was originally estimated: Ofgem reported installation rates are lower than expected if the industry was on track to deliver its obligations by March 2026; and energy suppliers are reporting higher costs and supply chain constraints that limit their ability to fulfil their obligations. These mid-scheme changes are designed to improve delivery of measures under GBIS while keeping within the original £1bn cost envelope for the scheme.

In the absence of these changes (the business as usual), energy suppliers are expected to under-deliver on their obligations and/or experience a higher then estimated costs to meet their delivery targets. This will adversely affect the fuel-poor and reduce the expected contribution to meeting the future carbon budget targets.

There was broad support for these changes in the recent government consultation from energy suppliers, the installation industry and groups representing the fuel poor.

Policy objective

The policy objectives are laid out in Sections 2, 3 & 4.

Briefly, GBIS has a wide eligible pool and supports installing insulation for a group of people who are not covered by other government schemes. As such, it is important to improve delivery under GBIS to reach these households. At the same time, there is a statutory duty to ensure that as many fuel-poor households as is reasonably practicable achieve a minimum energy efficiency rating of Energy Performance Certificate (EPC) Band C by 2030.

The policy objective of the government response is to implement changes within both schemes to enable more progress towards meeting the full GBIS target as well as maintaining support for the supply chain that delivers ECO4. The intended effect of the government response is that obligated energy suppliers and other stakeholders build confidence in ECO4 and GBIS, resulting in the outcome of increased delivery of both schemes, particularly GBIS. The final options that were chosen from the consultation responses, should enable obligated suppliers to meet their GBIS obligation within the original total scheme cost of £1billion.

Indicators of success that will be considered include the number of households treated, the cost per household, annual bill savings achieved, and the impact on fuel poverty.

Description of options considered

The options considered are laid out in Sections 4 & 5.

These options were informed by a public consultation carried out November 2024, from which 122 responses were received. The Department is grateful to have received representations from a broad range of stakeholders including obligated energy suppliers, local authorities, energy efficiency installers, trade bodies, consumer advice organisations, and academic institutions.

The consultation was split into 2 parts. The first part focused on proposals to improve delivery of the Great British Insulation Scheme (GBIS); the second focussed on smaller amendments to both GBIS and ECO4. The proposals received broad support.

Allowing loft and cavity wall insulation to be installed together, as well as allowing smart thermostats to be installed in GBIS received almost universal support. Respondents suggested expanding the type of measures that could be installed together to include any 2 lower risk measures. This change will be introduced as a result of this feedback. The intention is to legislate so these changes are allowed from the date of the consultation publication, 14 November 2024.

Respondents strongly supported the proposal to allow delivery achieved under ECO4 rules to count towards GBIS. They supported additional simplifications that will be implemented, such as the removal of annual targets on GBIS and facilitating annual bill savings achieved under ECO4 rather than individual ECO4 projects to be counted towards GBIS. There was general agreement that ECO4 delivery counting towards GBIS should be capped. A cap of 75% of the GBIS target will be introduced as a result. This means 25% of the GBIS target must be achieved by delivering to GBIS rules. Respondents agreed that a conversion factor should be introduced to ECO4 delivery counting towards GBIS to keep overall costs within the original spend envelope.

The conversion factors for ECO4 and GBIS were calculated using the target number of ABS that is required to be met, taking into consideration the £/ABS and how many ABS points need to be delivered after the initial 25%. Stakeholders agreed that this approach was preferable instead of increasing the GBIS spend with the subsequent increase in consumer bills. This conversion factor is calculated to be 1.716 GBIS ABS for each GBIS ABS delivered above 25%. For ECO4 ABS delivery, this conversion factor is calculated to be 1.251. Together with the ECO4 conversion factor, above, it has the effect of equalising delivery costs of ECO4 and GBIS projects irrespective of the final delivery ratios (above the minimum 25% GBIS through GBIS delivery), based on the latest modelling of the 2 schemes.

There was broad disagreement with the costs that were assumed for ECO4 and GBIS in delivery in calculating the conversion factors. However, some stakeholders agreed with our stated costs. The updated modelling results that deliver the conversion factors, above, have included additional costs of meeting PAS 2035/2030:2019 and a further increase in the cost of meeting the new PAS 2035/2030:2023 standard, and are now more in line with consultees’ views.

The Department is not considering using TrustMark Licence Plus (TMLP) for ECO4. This position was broadly supported by respondents. TMLP will not be introduced for GBIS either. Following the identification of issues with solid wall insulation identified through routine checks by TrustMark, the priority for the industry should be to take action to address these poor-quality installations as soon as possible. It is felt that the introduction of an alternative standard has the potential to cause delay and confusion amongst the supply chain.

Legislation will be amended to clarify the process around Ofgem’s rejection of measures for failure to comply with TrustMark’s requirements related to guarantees, consumer protection, and installation standards, such as PAS 2035/2030.

We will not be proceeding with amending legislation to address the qualifications of those undertaking a report substantiating the need for extraction of cavity wall or loft insulation for the purposes of determining building fabric repair expenditure. A chartered surveyor will still be required for this role. As a result of the ongoing review of consumer protection we feel changing this requirement is not appropriate at this time.

A Pay-For-Performance (PFP) pilot for ECO4 and GBIS will not be introduced. The timing of the 2024 General Election significantly delayed the timeframe for this consultation exercise and therefore the time available to implement PFP. The above-mentioned quality issues mean TrustMark and Ofgem’s attentions are rightly focussed on identifying any further issues and administrating rectification of these retrofits. Introducing PFP would take some capacity from these organisations that is prioritised for managing these quality control issues. Nevertheless, this consultation exercise has provided significant learning and evidence that can inform introduction of PFP to a future scheme. This consultation has therefore made important progress in moving towards a monitored savings mechanism in supplier obligations.

Summary and preferred option with description of implementation plan

The preferred option will be given effect via secondary legislation, due to be laid in May and come into force from July 2025.

The new arrangements will allow Energy Suppliers to meet their GBIS obligations using measures installed under ECO4 to be counted towards the GBIS totals. This will be done at the end of the scheme in March 2026.

The new arrangements will be overseen and enforced by Ofgem, the scheme administrator, who were consulted on these changes.

NPSV: monetised and non-monetised costs and benefits of each shortlist option (including administrative burden)

The costs and benefits are discussed above.

The values for the conversion factor have changed since the consultation, as the updated evidence of costs and the list of proposed options from the consultation responses have been factored into the new modelling. The changes now include floor insulation as an option into the multiple measure mix. One of the key changes in the modelling since the consultation is the difference in the percentage of delivery allowed through ECO4 and GBIS. For the Options Assessment a 50:50 split was assumed for both scheme delivery. For the final Impact Assessment, a split of 25:75 for GBIS delivery to ECO4 delivery, respectively, is modelled. The new modelling shows that the cost per ABS for GBIS is £26.51; for ECO4 delivery it is £19.32. As explained in the final summary table, these costs produce final conversion factors of 1.251 for ECO4 delivery up to 75%, and 1.716 for GBIS delivery above 25%.

No sensitivity analysis has been undertaken, as the choices available to improve delivery are limited due to the time left until the end of the scheme.

Costs and benefits to business calculations

There is no change in the costs to business due to the fact that the £1bn budget is the same as the spend envelope modelled for the original regulations, and costs are passed through to consumers.

Table 8 shows the initial GBIS Modelling run produced in the NBM for the agreed changes. The breakdown shows how the scheme still intends to stick to the £1bn threshold before adding in the further adjustments. The installation costs below include customer contributions modelled as £80m so once removed, the remaining total is £1bn. For the final outputs, further adjustments are calculated which alter the final mix. This includes calculating the 25% GBIS and 75% ECO4 split, applying the conversion factor for the ECO4 proportion, and reducing the customer contributions to £20m from £80m.

Table 8: Breakdown of £1bn budget for GBIS agreed changes in the NBM modelling

Economic Rent	Total Installation costs	Total admin costs	Total PAS costs	Total Search costs	Total
152,606,264	492,250,290	62,896,880	282,156,225	83,975,783	1,073,885,442

The breakdown of cost per ABS which inform the currency conversion values is shown in the tables, below. The original GBIS regulations modelling informed the number of ABS points required to be delivered for £1bn cost to suppliers. Table 9 shows the original ABS target, the original costs and the £ per ABS. However, the delivery evidence mentioned throughout explains that the £/ABS is higher than originally estimated and that stakeholders believe that they will be unable to meet the ABS points with the current policy as stated.

Table 9: Modelled costs and ABS points without changes

	ABS points	Cost	£/ABS
Original GBIS regulations modelling (with £80m customer contributions)	55,998,000	£1,080m	19.29

Table 10 shows the updated modelling for the changes proposed for GBIS, alongside ECO4 modelling with no sub-obligations^{[footnote 11]} which is different to the ECO4 FIA final model. The total cost has decreased for GBIS as the amount of customer contributions assumption has changed from £80m to £20m, due to stakeholder feedback. But the bill amount being passed through to consumers has not changed. Table 10 shows that the adjusted GBIS model is unlikely to meet the original ABS target solely and the cost of delivering a unit of GBIS ABS has still risen to £26.51 with these changes. The cost of ECO4 compliance is estimated to be £19.32/ABS, hence the difference in the currency conversions depending on the proportion of GBIS delivered through GBIS routes or ECO4. The final conversion factors are calculated on the basis of meeting the original ABS target, not the modelled ABS below.

Table 10: Modelled costs and ABS points with changes proposed

	ABS points	Cost	£/ABS
GBIS modelled changes (with £20m customer contributions)	38,472,126	£1,020m	26.51
ECO4 modelled with no sub-obligations in the final year	206,995,043	£4,000m	19.32

Figures 5 and 6 below illustrate the breakdown of how each scheme contributes to meeting the original ABS target in the modelling. The agreed stance is that there must be a minimum 25% delivery through GBIS, whilst the remaining 75% can be delivered through ECO4. However, suppliers are not constrained by this 25% and can deliver more than 25% of GBIS if they are able to. The outputs show that greater GBIS delivery above the threshold will result in more homes and measures being delivered in total. However, in the scenario with ECO4 75% delivery, though fewer homes are being treated, more measures are being delivered per home which will maximise the ABS.

Figure 5: Number of homes treated through each scheme

Figure 6: Number of measures installed through each scheme

Impact on small and micro businesses

The impact of these changes should be positive for SMBs, as it makes it more likely that energy suppliers will contract with them to deliver more GBIS compliance. The extent to which this occurs is very uncertain, however, given there is no evidence of the extent of under-compliance likely to occur without these policy changes.

Costs and benefits to households’ calculations

There should be no change to the EANDCH, as there should be no change in the direct cost to businesses. The cost to households to pay for the existing GBIS scheme is set by Ofgem using the original Impact Assessment’s estimate of £1bn cost on suppliers. This is recovered in energy bills, which should not change given these changes are designed to maintain that spending envelope.

More measures should be delivered to low-income households which will be a positive benefit from these changes. This is shown in the equity-weighted NPV. There are no significant non-monetised effects.

Business environment

The mid-scheme changes will allow for a greater number of measures to be installed under the GBIS scheme than without the changes. This will make it more likely businesses stay in the domestic retrofit market.

Trade implications

These mid-scheme changes are not expected to have any material impact on international trade as this policy is focussed on the domestic property retrofit market.

Environment: Natural capital impact and decarbonisation

The main impact of this policy will be to make the existing GBIS scheme more deliverable. It does become a smaller scheme with some changes, however, in order to keep within the £1bn budget. As a result, the energy and carbon savings expected are smaller than those modelled for the business-as-usual scheme. Being more deliverable, however, could ultimately result in more savings being delivered in practice.

Modelling of the original scheme if fully delivered compared to the revised policy results in the following savings:

Table 11: Non-Traded Carbon Savings delivered through GBIS – Original Scheme without Under-delivery v. Revised Policy

	Carbon Budget 5	Carbon Budget 6
Original scheme if fully delivered	0.44 MtCO2e	0.43 MtCO2e
Revised Policy	0.27 MtCO2e	0.26 MtCO2e

To achieve the 0.44 MTCO2e within the same budget, the scheme would have had to pivot to deliver heat pumps to fossil fuel-heated homes (which are not currently delivered in the scheme) or narrowed down the less carbon-saving measures available to be installed. Both of these options would have made the scheme even more challenging for the industry to deliver. The RdSAP-based scoring system makes heat pumps unlikely for all but electric-resistive-heated homes, but those will not deliver non-traded carbon savings, just traded (electricity-based emissions) savings. Reducing the measures available to be installed will restrict even further the homes available to treat, making delivery even more challenging.

These changes to carbon savings will be reflected in the government’s carbon abatement planning processes.

Other wider impacts (consider the impacts of your proposals)

No other wider impacts have been identified.

Risks and assumptions

The key assumptions used in this impact assessment are outlined in the Summary Analysis and Evidence section, above. The main risk in the modelling results stem from the extent to which these policy changes ensure energy suppliers can now deliver their full GBIS obligations, since the scheme ends in March 2026. Initiating new contracts for delivery takes time and there could be some delay between laying these regulations and the response in higher installation rates.

The consultation process gave a range of costs respondents thought were representative of being borne to deliver compliance with GBIS and ECO4. The costs per ABS required to deliver the schemes produced in this analysis is within the range provided to the department. There is a risk that, over the coming year, costs change which alter the main conclusions in this assessment that GBIS can be delivered at a cost to energy suppliers of £1bn.

1. The policy includes availability of other measures which are explained in the government response. These have not been included in the Final Impact Assessment due to modelling constraints but are believed to not make a material impact due to an estimated cost per household staying roughly the same. ↩

2. Household Energy Efficiency Statistics ↩

3. A number of households currently have eligibility type as unknown and a very small number of households are in-fill, meaning they are otherwise not eligible for the scheme. For this reason, the combined total of households from the general and low-income groups does not sum to the overall total. ↩

4. Great British Insulation Scheme release: February 2025 ↩

5. Energy Company Obligation public reports and data ↩

6. Household Energy Efficiency Statistics ↩

7. Design of the Energy Company Obligation (ECO): 2023-2026 - final impact assessment ↩

8. Design of the Energy Company Obligation ECO4: 2022-2026 - final impact assessment ↩

9. Design of the Energy Company Obligation (ECO): 2023-2026 - final impact assessment ↩

10. Design of the Energy Company Obligation ECO4: 2022-2026 - final impact assessment ↩

11. The ECO4 scheme is designed to deliver £4 billion over 4 years with set obligations, a minimum delivery to households with EPC bands EFG and a solid wall insulation target number of installations. This modelling has been ran without these obligations. ↩