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What Is ECO?

The energy efficiency scheme for Great Britain, Energy Company Obligation (ECO) places legal obligations on larger energy suppliers to deliver energy efficiency measures to domestic premises. ECO3 which is the government’s response to the Energy Company Obligation will run from Autumn 2018 until March 2022 and delivers energy efficiency and heating measures to homes in Great Britain. The scheme which launched in October 2018 provides numerous benefits for homeowners, key of which are:

  • ECO3 Target – the overall target for ECO3 has been increased by 7% to £8.235bn lifetime bill savings. This target can be accommodated within a £640m “spending cap”.There will be no “interim targets” – a supplier (Utility) will comply with ECO3 as long as they have met their total obligation by March 2022.
  • Affordable Warmth – Is focused on low income, vulnerable and fuel poor households. With ECO3, the Government has set the eligibility criteria which will result in approximately 6.6m households being eligible for the scheme. In addition, it will allow up to 25% of the obligation to be met through measures delivered under Local Authority Flexible Eligibility.
  • Fuel Poverty Reduction in rural households – to protect rural households, the Government require suppliers to meet at least 15% of their obligation by delivering measures in rural areas. To strengthen the scheme’s link to the Fuel Poverty Strategy further, it will also provide an uplift for measures delivered to low-income households living in F and G rated properties under the Flexible Eligibility part of the scheme. Given landlords’ responsibilities under the Private Rented Sector Minimum Standard Regulations, the Government will limit the use of ECO in certain circumstances so that landlords do not use it to meet their basic requirements.

The scheme’s other main policies include:

  • 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.
  • Require 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).

Ultimately the focus of ECO3 is on insulation and heating measures and supports vulnerable consumer groups. ECO as a whole is intended to assist in reducing carbon emissions, maintaining the security of energy supply and reducing fuel poverty.