The Energy Company Obligation (ECO) is an energy efficiency initiative that was launched by the UK government in April 2013. It aims to reduce the country’s carbon emissions, while helping to tackle fuel poverty.
The scheme has implications for both domestic energy users and energy suppliers, but also installers and the wider industry.
What is ECO?
ECO places a legal obligation on large energy suppliers to deliver energy efficiency measures in some of the country’s most vulnerable and hard to treat households. Insulation and heating measures are a key focus of the scheme, which is intended to assist the UK in achieving its carbon reduction target, maintaining security of energy supply and reducing fuel poverty.
Ofgem administers the ECO scheme on behalf of the Department for Energy, Business & Industrial Strategy.
Which suppliers are eligible under ECO?
Any energy supplier that meets the following criteria will have legal obligations under ECO:
- Has more than 250,000 domestic customers
- Provides over 400 gigawatt hours of electricity, or over 2,000 gigawatt hours of gas
ECO measures don’t have to be delivered to customers. Any obligated supplier can deliver measures to any domestic premises in England, Wales and Scotland that meets the criteria.
Main aims of the ECO scheme
As of 1 April 2017, ECO consists of two key obligations:
The Carbon Emissions Reduction Obligation (CERO): Whereby energy suppliers are obliged to help the UK reduce its carbon emissions by promoting the installation of wall and loft insulation and connections to district heating systems. Other insulation measures that meet certain conditions can also be installed.
The Home Heating Cost Reduction Obligation (HHCRO): For this obligation, suppliers must help reduce home heating costs for low income, fuel poor and vulnerable households, through the delivery of energy efficiency measures.
What measures does ECO cover?
There are a wide range of energy efficiency measures that can be installed through ECO. The full list of measures and the conditions under which they can be applied, are available on the Ofgem website.
From 1 April 2017, this includes:
- Insulation – solid wall, cavity wall, loft
- Boiler replacements
- Electric storage heater replacement and repair
- Heating controls
- District heating connections
- Air source heat pumps
- Ground source heat pumps
- Biomass boilers
- Solar PV
Which properties are eligible to receive ECO upgrades?
ECO applies to any domestic property where the residents meet certain criteria, such as being in receipt of benefits including Job Seekers’ Allowance, income support or tax credits. To benefit, residents must own their own home or have the permission of their landlord.
It also applies to private domestic premises that have been referred to ECO through a local authority declaration, and social housing where the premises has an EPC energy efficiency rating of E, F or G. (In these cases, only insulation and first time central heating measures can be delivered).
If you’re an installer, then you can find out more about ECO and opportunities for contractors by visiting the Ofgem website.