What is the ECO4 Scheme?
Updated: Feb 3
The Energy Company Obligation (ECO) is a scheme that has required energy suppliers to improve energy efficiency in the UK and take steps to tackle fuel poverty since its inception in 2013. As of 1st April 2022, the current ECO3 scheme will be replaced by its next incarnation, ECO4. This is the fourth and final phase of the ECO scheme, which, as things stand at the moment, is due to come to an end on 31st March 2026.
Though the government haven’t quite finalised the details of the ECO4 scheme, what it will involve is beginning to become clearer. To help get you up to speed, this blog from UK Energy Management (NE) Ltd covers the changes that have been proposed so far and what the ECO4 scheme is likely to look like upon its introduction.
What is the ECO3 scheme?
Having been in place since December 2018, ECO3 is the current phase of a government-led energy efficiency scheme which, with the support of both medium-sized and larger energy companies, aims to tackle fuel poverty and reduce carbon emissions throughout the UK.
It aims to do this by providing funding to low-income, fuel poor, and/or vulnerable households for energy efficiency measures such as internal and external wall insulation systems, loft insulation, heating systems, and new boilers. Other measures may qualify, subject to review by Ofgem and other relevant parties.
Each of the obligated energy suppliers must meet a target, based on their share of the domestic energy market, to ensure they are doing their bit to help - these are tracked in monthly Ofgem reports.
UK Energy Management (NE) Ltd helps its customers access the funding they need. We saved people throughout the UK more than £72 million in 2021, so you can be sure you’re in good hands. You have until 31st March 2022 to apply for funding through the ECO3 scheme, though we recommend doing it sooner rather than later - especially if you won’t be eligible under ECO4. If you are still eligible, we’ll also be able to help you access ECO4 funding when the scheme is introduced on 1st April.
What are the proposed changes under the ECO4 scheme?
While we are yet to find out for definite what the ECO4 scheme will entail, there have been a number of changes proposed throughout the drafting and consultation processes. So long as these proposed changes don’t face any obstacles between now and 1st April, it is likely that many of these changes will come into effect under ECO4.
Some of the changes that have been proposed include:
Changes to qualifying benefits, including the removal of a number of disability benefits from the list of eligible benefits and the addition of other benefits.
Changes to the number of energy-efficiency measures to be installed under the Local Authority Flexible energy (LA Flex) rules.
Changes to the requirements for improvement in Energy Performance Certificate ratings after having energy-efficiency measures installed.
Reduction in boiler installation funding and limitations on types of boilers eligible.
Changes to the list of qualifying benefits
One of the biggest proposed changes under ECO4 is the removal of certain types of benefits from the list of qualifying benefits. Benefits that qualify for ECO3 but will NOT qualify for ECO4 are:
● Disability Living Allowance
● Personal Independence Payment
● Attendance Allowance
● Carer’s Allowance
● Severe Disablement Allowance
● Industrial Injuries Disablement Benefit
● War Pensions Mobility Supplement
● Constant Attendance Allowance
● Armed Forces Independence Payment
There will also be a couple of new additions to the list of qualifying benefits: Housing Benefit and Pension Credit Savings Credit. Many people who are in receipt of the benefits that will no longer be eligible under ECO4 may be able to qualify through receiving Housing Benefit instead. The benefits that DO qualify for ECO4 are:
● Income-based Jobseeker’s Allowance
● Income-related Employment & Support Allowance
● Income Support
● Pension Credit Guarantee Credit
● Working Tax Credit
● Child Tax Credits (income thresholds may apply)
● Universal Credit
● Housing Benefit
● Pension Credit Savings Credit
If you receive one of the benefits that are being removed from the qualifying criteria, you should apply for funding under ECO3 sooner rather than later. We advise applying as soon as possible, as in some cases it can take several months to complete an application.
Proposed changes to the Local Authority Flexible Energy rules
The ECO3 scheme stipulates that energy companies can fulfil a maximum of 25% of their obligation through local authorities, under the Local Authority Flexibility Energy rules. These rules allow local councils to set their own eligibility criteria for subsidised or fully-funded energy-efficiency measures.
This extends the scope of the ECO3 beyond the initial eligibility criteria so that any household deemed low-income, fuel poor, and/or vulnerable by their local council can access the funding they need. This means that, if you don't claim benefits but you have high fuel costs, are older than 65, are pregnant, have young children, or have a health condition, you may still be able to access the ECO3 funding.
Under ECO4, these rules are changing. As of 1st April, energy companies can now deliver up to 50% of their obligation through the Local Authority Flexible Energy rules. This is being introduced with the aim of supporting those who are classed as low-income, fuel poor, and/or vulnerable but who are not in receipt of benefits that automatically qualify for ECO4. It is hoped that the expansion of the LA Flex rules will make up for the removal of certain benefits from the list of qualifying benefits by ensuring that those who need assistance have an alternative way of being eligible.
Changes to the Energy Performance Certificate (EPC) improvement requirements
There are also likely to be changes to the requirements for improvement in the energy-efficiency rating of properties after measures have been installed under ECO4. Where a property has an existing Energy Performance Certificate (EPC) rating of F or G, the grants will need to be used to improve the rating to at least a D rating. Where a property has an existing Energy Performance Certificate (EPC) band of band D or E, the grants will need to improve the rating to at least a C rating.
The Government has also proposed that a certain proportion of the UK’s Band E, F, and G homes should be upgraded using ECO4 funding, so that the most inefficient homes are not left behind by the scheme.
This approach is designed to increase the number of grants being awarded and energy-efficiency measures being installed. It also aims to ensure that the measures are actually effective in making the UK’s homes more energy-efficient and reducing energy bills.
Changes to number and type of boiler eligible for funding
Almost 134,000 boilers were installed under ECO3, but the same will not be true of ECO4. The new scheme will have a limit of 5,000 boilers, and there will be additional rules about which types of boilers qualify under ECO4.
This means that very few households will be eligible for boiler grants once the new rules come into effect, and boiler grants will be scrapped altogether once the cap of 5,000 boiler installations is reached.
How do I go about securing funding?
We know all of this might sound confusing, but it couldn’t be simpler! The team at UK Energy Management (NE) Ltd will gladly guide you through the process from start to finish. Meanwhile, you can rest easy knowing that making your home warm, comfortable, and safe is always our top priority.
If you choose us here at UK Energy Management (NE) Ltd to help you with your case, the process of securing funding will consist of just three simple steps:
Complete our online eligibility form to see whether you qualify for the ECO3 scheme.
If you do meet the eligibility criteria, we’ll visit your home to carry out a free, no-obligation survey - this is so we know exactly what home improvement measures you’d benefit from
Your brand new energy-saving measures will be installed in due course, so long as you (and possibly your landlord) are happy with our proposed ideas.
That’s it - time for you to enjoy your warm, comfy home! And let’s not forget the savings on your energy bills.
Manage your funding with UK Energy Management (NE) Ltd
If you’re interested in checking your eligibility for the ECO4 scheme, electric heating grants, or any other eco grants in the UK, look no further than UK Energy Management (NE) Ltd. We take pride in helping people secure the funding they need in order to get the living conditions they deserve, and our experienced technicians will be happy to install the upgrades you need to make your home warm and comfy this winter.