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What is ECO?

What is ECO?

The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain to help reduce carbon emissions and tackle fuel poverty.

The scheme began in April 2013, and over time it has been amended. The latest policy, ECO3, commenced on 3 December 2018, and applies to measures completed from 1 October 2018.

What are the main obligations?

This ECO policy will be entirely formed from one obligation, the Home Heating Cost Reduction Obligation (HHCRO). Under HHCRO, obligated suppliers must mainly promote measures which improve the ability of low income, fuel poor and vulnerable households to heat their homes. This includes actions that result in heating savings, such as fabric insulation measures to the walls, loft and floors as well as replacement of a broken heating system or the upgrade of one.

Under ECO2t, which ran from 1 April 2017 to 30 September 2018, suppliers were also required to deliver against an additional obligation called the Carbon Emissions Reduction Obligation (CERO

The government’s response to the Energy Company Obligation (ECO3) consultation sets out the policy of the scheme that will run from Autumn 2018 until March 2022. The scheme delivers energy efficiency and heating measures to homes in Great Britain.

The scheme’s other main policies include:

  • focusing the entire scheme to support low income, vulnerable and fuel poor households
  • reducing the current supplier obligation threshold of 250,000 customer accounts (or equivalent) for the scheme, in a phased way, to 150,000 customer accounts (or equivalent) from 2020
  • requiring 15% of measures to be delivered to rural homes
  • increasing the proportion of the scheme that can be delivered under local authority flexible eligibility to 25%
  • allowing up to 10% of a suppliers’ obligation to be met through the delivery of new, innovative products
  • supporting households that have a broken heating system by allowing the equivalent of 35,000 broken heating systems to be replaced per year
  • encouraging a multiple measure approach by allowing the replacement of inefficient heating systems to be replaced (outside of the broken heating system cap) if they are installed alongside insulation
  • requiring the equivalent of at least 17,000 solid walled homes to be treated per year, either through solid wall insulation, or using a combination of other technologies (if equivalent savings can be achieved in the property)

Who is eligible for HHCRO Grant Funding?

The grant scheme is focused initially on vulnerable and low-income households in a bid to reduce UK instances of fuel poverty. Fuel poverty is defined as a household that is not able to adequately heat their property at an affordable cost. As a guide fuel poverty is said to occur when more than 10% of a household’s income is spent on heating the home to an adequate level. Recent increases in fuel prices has led to a sharp increase of the number of UK home owners in this predicament.
If you are a home owner or live in private rented accommodation, and are in receipt of any of the following benefits you will qualify for HHCRO funding:

  • Pension Credit
  • Child Tax Credit (with an income of £15,860 or less)
  • Working Tax Credit (with an income of £15,860 or less)
  • Income Support
  • Income-based Job Seeker’s Allowance
  • Income-Related Employment Support Allowance

If you receive Income Support, income-based Jobseeker’s Allowance or income-related Employment Support Allowance one of the following must also apply:

  • You have a child under 16
  • You have a child under 20 in full-time education (not university)
  • You get Child Tax Credit including a disability element
  • You get a Disabled Child Premium
  • You get a Disability Premium
  • You have a Pensioner Premium
  • You have a Work Related Activity or Support Component (with income-related Employment and Support Allowance)

If you are in receipt of Working Tax Credit one of the following must also apply:

  • You are 60 years of age or over
  • You have a child under 16
  • You have a child under 20 in full-time education (not university)
  • You have a Severe Disability Element
  • You have a Disabled Worker Element