Energy Company Obligation

The Energy Company Obligation (ECO) is a British Government program. It is designed to offset emissions created by energy company power stations. The first obligation period ran from January 2013 to 31 March 2015. The second obligation period, known as ECO2, is from 1 April 2015 to 31 March 2017.

The Government obligates the larger energy suppliers to help lower-income households improve their energy efficiency.[1][2]

ECO is the replacement of two previous schemes, the Carbon Emission Reduction Target (CERT) and the Community Energy Saving Programme (CESP).[3] It has been announced that the program will be replaced in 2017 by a less extensive version.[1]

The program focused on heating, in particular improving insulation.[2]

Ofgem has been appointed the scheme administrator on behalf of the Department for Energy Security & Net Zero

How does ECO work?

The ECO scheme works by placing an obligation on large and medium energy suppliers in England, Scotland and Wales to provide energy-saving measures for households deemed to live in fuel poverty. Suppliers are allocated based on their overall share of the domestic gas and electricity market.

The range of measures available through the scheme include heating upgrades, solar panels, wall and roof insulation. The provision of these measures is designed to help vulnerable families reduce their energy bills. The scheme is also seen as a way of helping the government reach its net zero target by 2050.

ECO3 target reached

The ECO3 final determination report provides details on the overall performance of the scheme and conclusions regarding of energy suppliers’ achievement against their obligations. The overall target for all participant suppliers was an estimated lifetime bill savings of £8.253 Billion. The ECO3 final report confirms that this target was exceeded, with a total estimated lifetime bill savings of £8.457 Billion achieved.

Summary

A detailed report of ECO3 targets and measures can be found at the OFGEM website. The highlights of the findings are as follows:

  • The overall bill saving target for ECO3 HHCRO obligation was achieved with a total estimated lifetime bill savings of £8.457 Billion achieved.
  • All but one active supplier successfully met their HHCRO obligation and sub-obligation lifetime bill saving targets.
  • 1.03 million energy saving measures were installed over the course of ECO3. This included:
    • Broken down or energy inefficient boilers being replaced in 251,741 households with energy efficient condensing boilers or low carbon heating alternatives.
    • Cavity wall insulation installed in 152,938 households.
    • Underfloor insulation installed in 133,173 households.
    • Loft insulation installed in 88,588 households.
    • It is estimated that measures installed since the first ECO scheme was introduced in 2013 will provide lifetime carbon savings of around 58.2 MtCO2e. This is equivalent to the amount of carbon absorbed by 264 million mature trees over 10 years. OFGEM

ECO4

The latest iteration of the Energy Company Obligation (ECO4) began on 27th July 2022 and will run until 31st March 2026. ECO4 focusses on improving the least energy efficient properties and targets homes with an energy rating between D and G. It also aims to provide a more complete retrofit of properties to ensure maximum carbon emission savings. A minimum project scoring methodology is in place to ensure a multi-measure, whole house approach to each property. This is designed to encourage the installation of a variety of measures per household, including insulation, solar panels and renewable heating systems.

The eligibility critera for ECO4 has seen the removal of disability benefits which qualified under the ECO3 component of the scheme. The ECO4 focuses solely on households that receive income based benefits. This is perceived as having a greater focus on the most vulnerable in society.

References
  1. Walker, Jonathan (26 January 2016). "MP demands help for elderly after winter deaths double in the West Midlands". birminghammail. Retrieved 2016-01-27.
  2. "Energy Company Obligation | Energy Saving Trust". www.energysavingtrust.org.uk. Retrieved 27 January 2016.
  3. "Previous energy efficiency schemes | Ofgem". www.ofgem.gov.uk. Retrieved 27 January 2016.
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