Energy Company Obligation (ECO4)

The Energy Company Obligation (ECO4) is a UK government initiative aimed at enhancing home energy efficiency, reducing emissions, and lowering energy bills across Great Britain. Running from April 2022 to March 2026, this phase of the scheme targets low-income households and properties with poor energy performance ratings.

Key Objectives:

• Improve energy efficiency in 450,000 low-income households by 2026.

• Deliver average household energy bill savings of £300-£400 per year.

• Reduce lifetime CO2 emissions by over 6 million tonnes.

• Support the transition towards low-carbon heating and electrification.

Key Stakeholders:

• Energy Suppliers: Large companies like British Gas, E.ON, EDF, and Octopus Energy are obligated to fund and implement energy efficiency measures.

• Homeowners and Landlords: Can access grants for energy-saving improvements such as insulation, heating upgrades, and renewable energy installations.

• Local Authorities: Play a crucial role in identifying eligible households, particularly through the ECO Flex program.

• Ofgem: Administers the scheme, allocates targets to energy suppliers, monitors progress, and prevents fraud.

• Installers: Must adhere to strict standards (PAS 2035) to ensure high-quality installations.

ECO4 represents a significant step towards achieving the UK’s 2050 net-zero target while addressing fuel poverty and improving living conditions for vulnerable households.

ECO4 is designed to support households facing financial hardship or health vulnerabilities, as well as properties with poor energy efficiency ratings. The eligibility criteria are comprehensive and aim to ensure that assistance reaches those most in need.

Who Qualifies?

A. Households:

1. Benefit-Based Eligibility:

   • Recipients of specific means-tested benefits automatically qualify. These include:

     • Universal Credit

     • Income-based Jobseeker’s Allowance (JSA)

     • Income-related Employment and Support Allowance (ESA)

     • Income Support

     • Pension Credit Guarantee Credit

     • Working Tax Credit

     • Child Tax Credit

     • Housing Benefit

     • Pension Credit Savings Credit

2. Income-Based Eligibility:

   • Households with a gross annual income below £31,000 may qualify, subject to property criteria.

3. Health-Related Vulnerability:

   • Individuals with certain health conditions that make them vulnerable to the cold may be eligible. This includes those with:

     • Respiratory conditions (e.g., COPD, asthma)

     • Cardiovascular conditions

     • Limited mobility

     • Weakened immune systems

B. Properties:

1. Energy Performance Certificate (EPC) Ratings:

   • Homes with EPC ratings of D, E, F, or G are eligible.

   • Properties must have the potential to improve by at least two EPC bands.

2. Tenure Types:

   • Owner-occupied homes

   • Social housing (with EPC ratings of E, F, or G)

   • Private rented sector properties (subject to landlord contribution)

3. Specific Property Types:

   • Park homes

   • High-rise buildings

   • Properties off the gas grid

Eligibility Pathways:

1. Benefit-Based Route (Core Group):

   • Automatic qualification for households receiving eligible benefits.

   • Applicants must provide proof of benefit receipt.

2. ECO Flex Route (Flexible Eligibility):

   • Local authorities can identify and refer households that:

     • Are low-income and vulnerable to the effects of living in a cold home

     • Are in fuel poverty but don’t receive qualifying benefits

     • Fall just outside the benefit-based eligibility criteria

   • This route allows for a more nuanced approach to identifying those in need.

3. In-Fill Mechanism:

   • Allows for the treatment of non-eligible households in certain circumstances:

     • Up to 50% in-fill for solid wall insulation projects

     • Up to 30% in-fill for district heating system projects

Additional Considerations:

• Property Ownership: Homeowners must have the legal right to carry out improvements.

• Landlord Consent: For rented properties, written permission from the landlord is required.

• Previous ECO Measures: Properties that have received ECO measures in the past may still be eligible if further improvements can be made.

Check your eligibility here

The ECO4 scheme funds a comprehensive range of energy-saving upgrades designed to significantly improve a home’s Energy Performance Certificate (EPC) rating. The goal is to raise the EPC rating by at least two bands, focusing on whole-house retrofits for maximum efficiency gains. Here’s a detailed breakdown of the available measures:

Insulation Measures

• Loft Insulation: Reduces heat loss through the roof.

• Cavity Wall Insulation: Fills the gap between external walls to retain heat.

• Internal Wall Insulation: Improves thermal efficiency for solid wall properties.

• Room-in-Roof Insulation: Enhances energy efficiency in converted loft spaces.

These insulation measures can reduce heat loss by up to 30%, leading to significant energy savings.

<h3class=”mb-xs mt-5 text-base font-[525] first:mt-3″>Heating Systems

• Air Source Heat Pumps (ASHP): Extracts heat from outside air to warm homes efficiently.

• Solar Thermal Systems: Uses solar energy to heat water, reducing reliance on traditional heating methods.

• Electric Storage Heaters: Modern versions with smart controls for better energy management.

These systems aim to cut reliance on fossil fuels and improve overall heating efficiency.

Renewable Energy

• Solar Photovoltaic (PV) Panels: Generate electricity from sunlight, potentially saving £300–£400 annually on energy bills.

Additional Measures

• Heating Controls: Smart thermostats and zonal controls for optimised heating.

• District Heating Connections: Where appropriate, homes can be connected to community heating systems.

Important Notes:

1. Fossil Fuel Exclusion: ECO4 no longer subsidises fossil fuel boilers, including gas, oil, and LPG systems.

2. Whole-House Approach: The scheme prioritises comprehensive retrofits, often combining multiple measures for maximum impact.

3. Solar PV Integration: Solar panels can be installed alongside heat pumps or electric heating systems, enhancing overall energy efficiency.

4. EPC Rating Improvement: All measures must contribute to improving the property’s EPC rating, with a focus on upgrading homes from bands D-G to higher efficiency levels.

By offering this wide range of measures, ECO4 aims to deliver significant improvements in home energy efficiency, reduce carbon emissions, and help households save on energy bills while creating more comfortable living environments

Check your eligibility here

The Energy Company Obligation (ECO4) scheme delivers numerous advantages to homeowners and renters alike, creating more comfortable, affordable, and sustainable living environments.

Reduced Energy Bills

One of the most significant benefits of ECO4 is the potential to substantially lower energy costs. By funding upgrades like upgraded boilers, heating systems, insulation, and smart heating controls, households can save up to 30% on annual energy expenses.

Increased Home Comfort

Energy-efficient upgrades lead to more consistent indoor temperatures, creating a warmer and cosier home environment, especially during colder months. Measures like insulation and modern heating systems prevent heat loss, ensuring a more comfortable living space year-round.

Free or Subsidised Energy Upgrades

ECO4 offers fully funded or highly subsidised upgrades for eligible homeowners and renters. This includes the replacement of old, inefficient boilers, the installation of modern central heating systems, and the upgrading of homes with renewable solutions like heat pumps.

Boost in Home Value

Improving a home’s energy efficiency rating increases its property value. Buyers are more likely to invest in homes with better EPC ratings, knowing they will save on long-term energy costs.

Contribution to a Greener Planet

By switching to energy-efficient systems, homeowners and renters can reduce their carbon footprint, rely less on fossil fuels, and embrace renewable energy options, supporting the UK’s goal to achieve net-zero carbon emissions by 2050.

Long-Term Savings

While the upgrades are often free or subsidized, the long-term savings are significant. Homeowners and renters benefit from improved energy efficiency for 10-15 years or more, depending on the upgrades.

Package of Energy-Saving Measures

ECO4 offers a package of energy-saving measures and heating improvements designed to increase a home’s EPC rating. The scheme is not restricted to boiler upgrades or replacements, offering a comprehensive approach to improving energy efficiency.

Financial Security

By reducing energy bills, families can allocate funds to other essential needs, enhancing their financial security.

Sustainable Homes

ECO4 encourages the uptake of sustainable practices to reduce energy consumption and carbon footprint. By offering incentives for the installation of renewable energy sources, improved insulation, and energy-efficient heating systems, it provides a whole host of benefits for homeowners and renters and contributes to a wider environmental goal of decreasing carbon emissions and promoting a greener way of living.