The Data Source Blog

Energy Obligation ECO4: Providing A Greener Tomorrow

Daniel Triana
January 27, 2022

The Data Source is gaining traction in the clean energy sector, with a particular focus on assisting low-income households in obtaining clean energy solutions across the United Kingdom.

What is the Energy Company Obligation?

The Energy Company Obligation (ECO)is a government financial obligation to support the installation of renewable energy technologies in households inside the UK with high energy costs. The ECO acts as an incentive for energy providers to offer consumers cost-saving measures, such as insulation and low-energy light bulbs. The purpose of ECO is also to reduce the domestic carbon footprint by improving energy efficiency and to make low carbon energy more affordable for households.

Following the launch of the Energy Company Obligation (ECO) in 2013, more than 3.1million measures have been installed in nearly 2.3 million homes throughout England, Scotland and Wales, according to official figures.

 

The current phase ECO3

While ECO3,the current phase, came into effect on December 3, 2018, it is still valid until March 31, 2022. As of now, the fourth and final stage of the government’s Energy Company Obligation comes into force on April 1, 2022 with the predicted end date of March 31, 2026.

The government's proposed solutions for the future design of the ECO scheme include:

  • Targeting low-income, vulnerable, and fuel-poor households;
  • The least energy efficient homes will receive greater support and a deeper retrofit where all houses must meet new minimum energy efficiency standards;
  • Local governments and suppliers can both contribute to the scheme's success if the Local Authority Flexible Eligibility route is reformed;
  • The interaction of ECO with other grant funding;
  • Better possibility for small suppliers to participate in ECO through a supplier buy-out mechanism, subject to primary legislation;
In order to determine ECO’s effectiveness in improving energy efficiency in the UK housing sector, it is important to understand why it was established in the first place. The ECO operates as an incentive in order to reduce greenhouse gas emissions by giving consumers access to sustainable and renewable energy technologies such as solar electricity, heat pumps and LED light bulbs.

To build and support green growth, skilled jobs and a better lifestyle while protecting the environment, achieving net zero is a unique opportunity for the UK. This includes fairness when it comes to transitioning the economy. Like stated previously the focus lays on low-income households, who are not able to upgrade their homes and heating systems by themselves. In addition to that the suggested way is to mainly improve the least efficient homes, whereby with the help of this procedure, the government is also able to fulfil the commitments in the sustainable warmth strategy.

Improvement of the Energy Performance

The obligation aims towards changing eligible benefits, which means the withdrawal of a number of disability benefits. It also includes changes to the number of measures to be installed as part of the Local Authority Flexible Energy Program. Since companies were only allowed carry out a maximum of 25% of their obligation during ECO3 according to the rules of the local authority Flexible Energy (often also called LA Flex), this is now upgraded to 50% in ECO4.

Besides that, there are additional requirements proposed to improve the Energy Performance Certificate (EPC). If a household has an existing EPC band of F or G, the grants for upgrading to at least D should help. So, inferring from this, properties with an Energy Performance Certificate of F or G should increase to at least D. To not lose the focus on the most inefficient homes, a minimum number of bands E, F, and G will be upgraded in order to achieve maximum improvement in this way. By using this strategy, the number of awards and energy-efficiency savings will grow. Besides that, the number of investment funds from the measures introduced per home will increase and the require for future updates to those properties will decrease.

Another important part that was being consulted, is the abolition and therefore dismantling of old, inefficient boilers of households. So not everyone will be able to keep his own. The permitted number of boilers to be installed was also limited to 5000 under ECO4. In comparison, 134,000 boilers were installed during ECO3. Furthermore, new rules will be introduced, as new and replacement gas heating systems, new LPG and oil heating systems are only supported to a limited extent. Since it is expected, that most of the inefficient households need solid wall insulation, 22,000 wall insulations are expected to be installed annually in those homes, in order to meet the minimum requirement.

Moreover, obligation thresholds are to be abolished in the long term, since energy suppliers are currently obliged under the ECO with more than 150,000 domestic customer accounts, depending on the delivery quantity.

 

Changes of qualifying benefits in ECO4

Moving forward with the new definition of the Energy Company Obligation scheme, local services and councils will play a crucial role in both evaluating and facilitating measures. The ECO4 schemes are changing to let all customers have greater access to a wide range of renewable energy technologies. These changes include having less subsidies and being more flexible to encourage innovation and better technology options. It also enabled local groups to contribute towards making ECO work.

In addition to the main determinations, it is important to know which qualifying benefits will be removed and which will be added in detail:

The qualifications for ECO4 include income-based Jobseeker’s allowance (JSA),income related Employment& Support Allowance (ESA), Income Support (IS),Pension Credit Guarantee Credit, Child Tax Credit (CTC), Universal Credit (UC),Working Tax Credit (WTC), Housing benefit (new benefit under ECO4) and Pension Credit Savings Credit (also new eligible benefit).

On the other hand, it is all the more important to know which non means tested benefits that were previously eligible under ECO3, but no longer under ECO4: disability living allowance (DLA), severe disablement allowance, Personal Independence Payment (PIP), carer's allowance, attendance allowance, constant attendance allowance, war pensions mobility supplement, armed forces independence payment and Industrial Injuries Disablement Benefit.

 

Funding and Restructuring

The tightening of the rules on Soft Water Heating and water heating appliances, but also the redefinition of many aspects in ECO4, has led to a number of suitable changes.

The funding for ECO4 is provided by the treasury. Directly funded by the government through the ECO fund at no cost to business in general or to domestic customer customers. Only natural gas, gas and LPG are eligible for grants under this section. However, with the new concept in particular, it is very important to check that the appropriate criteria are met.

To make sure that you are approved for the benefits, it is important to apply for them as early as possible, as applications can take up to several months to be implemented (such as when a new gas line is laid).

The regulations of ECO4 are not only important for private households, of course, but also affect energy suppliers and efficiency installers, local authorities, academic groups, consumer groups and energy efficiency measure manufacturers and associated software developers.

Even if the basic idea of ​​ECO remains the same, as it was already a great success, ECO4 is better adapted to the climate agenda and is therefore a grandiose continuation and expansion.

With this four-year plan, the UK population will live in warmer, healthier and more comfortable homes!

 

What impact does this have on The Data Source?

The Data Source is gaining traction in the clean energy sector, with a particular focus on assisting low-income households in obtaining clean energy solutions across the United Kingdom.

The Data Source's next step will be to assist in the development of a contact center that can calculate your carbon emissions per region, an information resource center for those looking for the next step in the green revolution, and, in collaboration with the UK government, The Data Source's will be the mitigatory of data to provide installations to those who require them and source the best possible installation companies for those areas. Overall, assisting communities in living in greener neighborhoods across the United Kingdom.

Energy Obligation ECO4: Providing A Greener Tomorrow

The Data Source is gaining traction in the clean energy sector, with a particular focus on assisting low-income households in obtaining clean energy solutions across the United Kingdom.

The Data Source
Julian Galluzzo
Profile
July 28, 2021
-
6
min read

What is the Energy Company Obligation?

The Energy Company Obligation (ECO)is a government financial obligation to support the installation of renewable energy technologies in households inside the UK with high energy costs. The ECO acts as an incentive for energy providers to offer consumers cost-saving measures, such as insulation and low-energy light bulbs. The purpose of ECO is also to reduce the domestic carbon footprint by improving energy efficiency and to make low carbon energy more affordable for households.

Following the launch of the Energy Company Obligation (ECO) in 2013, more than 3.1million measures have been installed in nearly 2.3 million homes throughout England, Scotland and Wales, according to official figures.

 

The current phase ECO3

While ECO3,the current phase, came into effect on December 3, 2018, it is still valid until March 31, 2022. As of now, the fourth and final stage of the government’s Energy Company Obligation comes into force on April 1, 2022 with the predicted end date of March 31, 2026.

The government's proposed solutions for the future design of the ECO scheme include:

  • Targeting low-income, vulnerable, and fuel-poor households;
  • The least energy efficient homes will receive greater support and a deeper retrofit where all houses must meet new minimum energy efficiency standards;
  • Local governments and suppliers can both contribute to the scheme's success if the Local Authority Flexible Eligibility route is reformed;
  • The interaction of ECO with other grant funding;
  • Better possibility for small suppliers to participate in ECO through a supplier buy-out mechanism, subject to primary legislation;
In order to determine ECO’s effectiveness in improving energy efficiency in the UK housing sector, it is important to understand why it was established in the first place. The ECO operates as an incentive in order to reduce greenhouse gas emissions by giving consumers access to sustainable and renewable energy technologies such as solar electricity, heat pumps and LED light bulbs.

To build and support green growth, skilled jobs and a better lifestyle while protecting the environment, achieving net zero is a unique opportunity for the UK. This includes fairness when it comes to transitioning the economy. Like stated previously the focus lays on low-income households, who are not able to upgrade their homes and heating systems by themselves. In addition to that the suggested way is to mainly improve the least efficient homes, whereby with the help of this procedure, the government is also able to fulfil the commitments in the sustainable warmth strategy.

Improvement of the Energy Performance

The obligation aims towards changing eligible benefits, which means the withdrawal of a number of disability benefits. It also includes changes to the number of measures to be installed as part of the Local Authority Flexible Energy Program. Since companies were only allowed carry out a maximum of 25% of their obligation during ECO3 according to the rules of the local authority Flexible Energy (often also called LA Flex), this is now upgraded to 50% in ECO4.

Besides that, there are additional requirements proposed to improve the Energy Performance Certificate (EPC). If a household has an existing EPC band of F or G, the grants for upgrading to at least D should help. So, inferring from this, properties with an Energy Performance Certificate of F or G should increase to at least D. To not lose the focus on the most inefficient homes, a minimum number of bands E, F, and G will be upgraded in order to achieve maximum improvement in this way. By using this strategy, the number of awards and energy-efficiency savings will grow. Besides that, the number of investment funds from the measures introduced per home will increase and the require for future updates to those properties will decrease.

Another important part that was being consulted, is the abolition and therefore dismantling of old, inefficient boilers of households. So not everyone will be able to keep his own. The permitted number of boilers to be installed was also limited to 5000 under ECO4. In comparison, 134,000 boilers were installed during ECO3. Furthermore, new rules will be introduced, as new and replacement gas heating systems, new LPG and oil heating systems are only supported to a limited extent. Since it is expected, that most of the inefficient households need solid wall insulation, 22,000 wall insulations are expected to be installed annually in those homes, in order to meet the minimum requirement.

Moreover, obligation thresholds are to be abolished in the long term, since energy suppliers are currently obliged under the ECO with more than 150,000 domestic customer accounts, depending on the delivery quantity.

 

Changes of qualifying benefits in ECO4

Moving forward with the new definition of the Energy Company Obligation scheme, local services and councils will play a crucial role in both evaluating and facilitating measures. The ECO4 schemes are changing to let all customers have greater access to a wide range of renewable energy technologies. These changes include having less subsidies and being more flexible to encourage innovation and better technology options. It also enabled local groups to contribute towards making ECO work.

In addition to the main determinations, it is important to know which qualifying benefits will be removed and which will be added in detail:

The qualifications for ECO4 include income-based Jobseeker’s allowance (JSA),income related Employment& Support Allowance (ESA), Income Support (IS),Pension Credit Guarantee Credit, Child Tax Credit (CTC), Universal Credit (UC),Working Tax Credit (WTC), Housing benefit (new benefit under ECO4) and Pension Credit Savings Credit (also new eligible benefit).

On the other hand, it is all the more important to know which non means tested benefits that were previously eligible under ECO3, but no longer under ECO4: disability living allowance (DLA), severe disablement allowance, Personal Independence Payment (PIP), carer's allowance, attendance allowance, constant attendance allowance, war pensions mobility supplement, armed forces independence payment and Industrial Injuries Disablement Benefit.

 

Funding and Restructuring

The tightening of the rules on Soft Water Heating and water heating appliances, but also the redefinition of many aspects in ECO4, has led to a number of suitable changes.

The funding for ECO4 is provided by the treasury. Directly funded by the government through the ECO fund at no cost to business in general or to domestic customer customers. Only natural gas, gas and LPG are eligible for grants under this section. However, with the new concept in particular, it is very important to check that the appropriate criteria are met.

To make sure that you are approved for the benefits, it is important to apply for them as early as possible, as applications can take up to several months to be implemented (such as when a new gas line is laid).

The regulations of ECO4 are not only important for private households, of course, but also affect energy suppliers and efficiency installers, local authorities, academic groups, consumer groups and energy efficiency measure manufacturers and associated software developers.

Even if the basic idea of ​​ECO remains the same, as it was already a great success, ECO4 is better adapted to the climate agenda and is therefore a grandiose continuation and expansion.

With this four-year plan, the UK population will live in warmer, healthier and more comfortable homes!

 

What impact does this have on The Data Source?

The Data Source is gaining traction in the clean energy sector, with a particular focus on assisting low-income households in obtaining clean energy solutions across the United Kingdom.

The Data Source's next step will be to assist in the development of a contact center that can calculate your carbon emissions per region, an information resource center for those looking for the next step in the green revolution, and, in collaboration with the UK government, The Data Source's will be the mitigatory of data to provide installations to those who require them and source the best possible installation companies for those areas. Overall, assisting communities in living in greener neighborhoods across the United Kingdom.

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