What’s the Energy Company Obligation (ECO)?

Energy Company Obligation

The UK has committed to reducing its carbon emissions by 80% of 1990 levels by 2050 in an effort to keep climate change within survivable limits. As a quarter of all greenhouse emissions come from our energy supply, transforming the way we generate and consume electricity and gas will be a key front in this battle.

In addition to greening our energy supply, transitioning away from the use of fossil fuels to generate electricity and toward renewable resources like solar and wind power, Britons will have to reduce the amount of energy they consume.

Consumers aren’t in this fight alone. The government has made energy companies legally responsible for helping low-income households increase the energy efficiency of their homes, reducing their carbon footprint and their energy bills and increasing the safety and comfort of their living spaces. This responsibility is mediated through the Energy Company Obligation (ECO) scheme. It has primarily involved large and medium energy companies assisting vulnerable and low-income households install insulation in their homes.

ECO was launched in 2013 and has been run in three iterations. It has reportedly helped with the installation of 2.3 million energy efficiency measures in 1.8 million homes, “helping to reduce people’s energy bills, making homes more energy efficient, saving carbon and making our energy system more resilient,” the government claims.

The latest version of the ECO, launched in the Autumn of 2018, will run through 2022, and unfortunately, it’s more stripped back than even the more limited 2017-18 version. ECO3 is devoted entirely to household heating and to the tackling of fuel poverty (when homes need to spend more than 10% of their income on fuel to heat their homes to adequate standards of warmth—defined to be 21°C in the main living room and 18°C in other occupied rooms). It’s focused more on providing “affordable warmth” to these households than to reducing carbon emissions.

However, as heating accounts for two-thirds of the energy consumption of a typical household and half of its bills—and with 3,000 Britons reportedly dying each year because they can’t afford to heat adequately their homes in winter—you could say it’s delivering impact where it will most be felt.

Obligations under ECO3

The third version of the Energy Company Obligation (ECO3) consists of just one obligation: the Home Heating Cost Reduction Obligation (HHCRO). This requires obligated suppliers (more about which energy companies qualify below) to help low income, fuel poor, and vulnerable households safely, affordably and efficiently heat their homes. Under the scheme, suppliers have to “promote the installation of measures that lead to financial savings on energy bills, such as the installation of insulation and heating measures.”

Under the ECO, you may be able to receive financial assistance from the installation of new insulation in your home or a new, more efficient boiler.

Measures that can be installed under ECO3 include:

  • solid wall insulation
  • cavity wall insulation
  • loft insulation
  • flat roof insulation
  • under floor insulation
  • draught proofing
  • double glazing of windows
  • first time central heating
  • replacement of broken boiler
  • new connection to a district heating system
  • heating controls, including smart thermostats

Obligated suppliers

Under the ECO3 revision, suppliers with more than 250,000 domestic accounts which supply more than 500GWh of electricity and 1,400GWh of gas to those customers each year are required to participation in the scheme. Obligated companies are assigned a target by Ofgem, based on their share of the domestic energy market.

Obligated suppliers include:

  • British Gas
  • EDF Energy
  • E.ON Energy
  • npower
  • Scottish and Southern Energy (SSE)
  • ScottishPower
  • Bulb
  • Co-operative Energy
  • Economy Energy
  • First Utility
  • Green Star
  • OVO
  • Utilita
  • The Utility Warehouse

Eligible households

You’re eligible for financial assistance with increasing the energy efficiency of your heating under ECO3 if you are a core group customer from scheme year 9 onwards under the Warm Home Discount Scheme or if you receive at least one of the following benefits, while meeting relevant income requirements:

  • Armed Forces Independence Payment
  • Attendance Allowance
  • Carer’s Allowance
  • Child Benefit
  • Constant Attendance Allowance
  • Disability Living Allowance
  • Pension Guarantee Credit
  • Income-related Employment and Support Allowance (ESA)
  • Income-based Jobseeker’s Allowance (JSA)
  • Income Support
  • Industrial Injuries Disablement Benefit
  • Mobility Supplement
  • Personal Independence Payment
  • Severe Disablement Allowance
  • Tax Credits (Child Tax Credits and Working Tax Credits)
  • Universal Credit

Those living in social housing with an EPC rating of F or G can also qualify.

To benefit from ECO improvements, you’ll either need to own your own home or have permission from your landlord, including local authorities and housing associations.

You’ll also need to be supplied by one of the obligated energy firms listed above. It might be worth switching to one of those suppliers—after you compare energy tariffs to find the best quote—if you’re looking for help increasing the energy efficiency and safety of your home this winter.

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